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Spanish recession deepens: central bank

Spain’s economy took its steepest dive in more than three years in the final quarter of 2012 as high unemployment and biting austerity measures slashed demand, a Bank of Spain report showed Wednesday.

Available data pointed to gross domestic product plunging by 0.6 percent on a quarterly basis in the final three months of the year after a 0.3-percent dip the previous quarter, it said.

It marked the sharpest quarterly fall in Spanish economic output since the second quarter of 2009 when the eurozone’s fourth biggest economy was reeling from a massive property crash.

Spain’s economic output has been on a downward path since the final quarter of 2011, the central bank said. “Available data indicate that this intensified in the October-December period.”

Demand by consumers and businesses plummeted by 1.9 percent in the fourth quarter from the previous three months, the Bank of Spain said.

The economy was hammered in part because a buying spree ahead of a September 1 sales-tax increase had evaporated in the final quarter. At the same time, public sector workers had their Christmas bonuses cancelled.

Tough financing conditions in the midst of a banking crisis and a weak labour market — with one in four workers unemployed in Spain — further depressed demand for Spanish goods and services.

Over the whole of 2012, the Bank of Spain estimated that economic output fell by 1.3 percent from the previous year. That was slightly better than the government’s forecast for a 1.5-percent contraction.