Spanish central bank says economy shrank 0.5 per cent in Q1 for 7th quarterly contraction

MADRID – Spain’s central bank says the recession continued in the first three months of the year, with the economy shrinking by 0.5 per cent, its seventh quarterly contraction.

The bank said Tuesday that the drop was somewhat milder than the 0.8 per cent contraction in the final quarter of 2012. Compared with a year earlier, the economy was 2 per cent smaller in the first quarter.

The bank blamed a continuing fall in consumer spending, which dropped 0.8 per cent in the first quarter. The unemployment rate is 26 per cent.

The bank has predicted the economy will contract 1.5 per cent this year and only return to growth in late 2014.

The central bank’s figures are an independent estimate. The official figures by the national statistics agency will be reported on April 30.