Spain downgrades economic data for 2010, 2011

Spain downgraded its economic performance in 2010 and 2011 Monday, showing it barely recovered from the last downturn before plunging anew into recession. Spain's economy grew just 0.4 percent last year after emerging from recession at the start of 2010, not the 0.7 percent previously stated, the National Statistics Institute said. In 2010, output shrank by 0.3 rather than the much milder 0.1-percent decline earlier estimated, it said. Spain only emerged at the start of 2010 from nearly two years of recession sparked by the global financial crisis and a property bubble implosion that destroyed millions of jobs and left huge debts in its wake. But the recession returned with a vengeance. Output has been shrinking since the final quarter of 2011, and the trend is deteriorating. In the second quarter of this year the economy posted a 0.4-percent contraction -- after showing declines of 0.3 percent in the previous two quarters -- and the unemployment rate hit 24.6 percent. Spain's government is tipping an economic decline of 1.5 percent this year, and another 0.5 percent in 2013. The backdrop is grim. Spain snatched a 100-billion-euro ($124-billion) eurozone rescue loan in June to salvage the balance sheets of its banks. The government is meanwhile pursuing a severe austerity programme, slashing spending to rein in a gaping deficit and to regain the confidence of investors, who are demanding a high premium for loans. Nevertheless, analysts increasingly believe Spain will have to seek a sovereign bailout as borrowing rates remain high and the nation faces a crunch in October with more than 30 billion euros in debt payments due. The Spanish government has called on the European Central Bank to come to its aid by resuming its programme of purchasing government bonds on the open market. But the ECB is expected to act only if Madrid accepts new conditions by formally requesting help from eurozone bailout funds, which could also lend a hand by purchasing newly issued bonds. Spain's statistics institute said it revised the previous years' data after taking into account structural data related to business, agriculture and services.