Spain Sees 2nd Recession Since 2009

Posted April 16th, 2012 at 10:20 am (UTC-5)
Leave a comment

Spain says its economy has likely slipped back into its second recession since 2009, raising new fears that it eventually might need an international bailout.

Official statistics will not be available until a later date, but Spain's economic minister, Luis de Guindos, told the El Mundo newspaper that the country's economy likely shrank in the last three months. He said the economy probably contracted by an amount similar to the drop of three-tenths of a percent in the last quarter of 2011.

The economic chief said Spain would not need a rescue package from other European countries. Financial analysts were not as optimistic, however, and the country's borrowing costs jumped Monday to their highest level since December.

The interest rate on 10-year bonds for the Madrid government topped 6 percent, just short of the 7-percent level that debt-ridden Greece, Ireland and Portugal found necessary to secure rescue packages in the last two years.

Spain's economy, the fourth largest in the 17-nation euro currency bloc, is facing several challenges: banks have a huge volume of bad loans stemming from a domestic real-estate market collapse in 2008, and the country's 23-percent unemployment rate is the highest in the eurozone.