It's been a long time since Spain released good news for traders. And yesterday was not an exception.
According to the National Statistics Agency, the Spanish GDP reduced by 0.3% in the first quarter 2012 and reached minus 0.4% on the annual basis.
This is the second setback of economic growth indicator, that means that Spain has stepped into recession phase, that is quite expectable with the austerity measures taken by the Government. Due to this program the authorities are going to cut the budget deficit by 8.5% this year to the level of 5.3%.
Such plans are implemented by means of social programs reduction, the income tax boost, salary freezing of state officials and budget retrenchment of ministries and agencies. It is no wonder that people's purchasing power and demand are falling amid such conditions.
What is more, the highest unemployment rate among European countries is fixed in Spain. Today every fifth citizen of this country has no job.
It comes as a reason for the international agencies to downgrade the Spanish credit rating and for the investors to lose interest to the Spanish bonds, that increases the yield rate of public papers in its turn. As a consequence, the rising debt obligation deepens the downturn within the euro area.