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Spanish economy 'continues to worsen'

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Spanish economy continues to worsen

The Spanish economy continued to worsen in the final quarter of 2012, the latest official data reveals.

A report entitled the Flash Estimate of the Quarterly National Accounts - Base 2008 from the Instituto Nacional de Estadistica confirmed that in the final three-month period of the year, a quarterly variation of -0.7 per cent was registered.

This means that the annual rate stood at -1.8 per cent in Q4, while the variation of the gross domestic product volume for the year was -1.37 per cent.

like HiFX have recently been arguing that Spain's ongoing economic crisis has made the idea of owning property in the country less appealing for investors.

Widespread concerns have been raised that this could lead to Spain ultimately being unable to repay its debts.

The European Central Bank (ECB) has offered struggling economies on the south of the continent cheap four-year loans, but the financial body found that banks are reluctant to lend out to the rest of the economy.

Indeed, in the last three months of 2012, banks have tightened their lending standards and are expecting to do so again in the early part of 2013.

Carsten Brzeski, economist at ING, argued that banks are simply responding to demands from regulators that they increase their ability to absorb any potential losses on loan agreements that are already in place.

It is hoped that this will also empower them to cope with strains and weaknesses in the general eurozone economy.

"This illustrates the double credit whammy in the eurozone," Mr Brzeski remarked, adding: "Tightening of credit conditions on supply side and a fall in demand, it's a squeeze on both sides."

"[The] crisis of the real economy is far from being over and these numbers support the ECB's view that growth will only return in the second half of the year."

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