The Spanish economy contracted by
0.3 percent in the January-March quarter, the same rate of
contraction as in the last quarter of 2011, the National
Statistics Institute said in Madrid. The common definition
of a recession is two consecutive quarters of real economic
decline.
The Euro Stoxx 50 index, which
tracks euro zone blue-chip shares, fell 1.6 percent by the
close of trading. The FTSE 100 index in London was down 0.7
percent.
The Spanish economic news was not
quite as bad as anticipated — a Reuters poll had found a
market consensus for a quarterly contraction of around 0.4
percent. Compared with the first quarter a year earlier, the
Spanish economy shrank by 0.4 percent.
Still reeling from the collapse of a
property market bubble, Spain is seeking to enact austerity
measures to restore government finances, even as it grapples
with an unemployment rate of 24.4 percent. The market
reaction was muted, with Spanish and other bond yields — the
subject of intense scrutiny since the euro crisis began —
essentially unchanged.
The data suggested that “the Spanish
economy is not shrinking as rapidly as the other southern
European economies,” Ben May, an economist in London with
Capital Economics, noted in a report. But he cautioned that
“the full effects of the recent fiscal measures on economic
growth will not have yet been fully felt.”
He predicted the recession would
“deepen over the remainder of the year,” with an overall
2012 contraction of about 1.5 percent this year and another
3.0 percent next year.
The Continent was trading nearly on
autopilot, as many investors were taking advantage of the
May Day holiday on Tuesday to take a four-day weekend.
The dollar was mixed against other
major currencies. The euro fell to $1.3225 from $1.3238 late
Friday in New York, while the British pound rose to $1.6245
from $1.6266. But the dollar fell to 80.09 yen from 80.27
yen.
Markets were closed in much of Asia,
including Japan and mainland China. In Hong Kong, the Hang
Seng index rose 1.6 percent, while the Australian benchmark
index gained 0.8 percent.
