There was good news and there was bad news for Spain this morning.
The bad news was that the country’s economy recorded a fifth consecutive quarter of contraction. The good news was that the level of that contraction was not quite as bad as feared.
Although last week the Bank of Spain estimated Spanish economic contraction of 0.4 per cent according to the National Statistics Institute the figure for the three months from June was actually 0.3 per cent. The NSI also disclosed a 3.5 per cent year-on-year increase in Consumer Prices.
This decline in Spain’s Gross Domestic Product might not be as large as expected but contraction continuing despite all of the nation’s attempts to repair its gaping deficit means Spain’s outlook remains far from optimistic. Furthermore, the tax hikes implemented to relieve the country’s mammoth debt have served to both deter consumption and fuel inflation.
As an economist with ING Bank states: ‘The real discussion should be about how protracted the recession will be and if you look at the fiscal tightening you really have to be conservative about next year.’ Martin Van Vliet continued: ‘I’m very concerned about the size of the fiscal tightening, the fact they’re going to miss their deficit targets and the fact that Rajoy is delaying the request for aid.’
Many are hoping that today’s news is the last push Spanish President Mariano Rajoy needs towards seeking international aid.
As of 9:55 am
The Pound to Euro exchange rate is currently trading at 1.2404
The Pound to US Dollar exchange rate is currently trading at 1.6052
The Pound to Australian Dollar exchange rate is currently trading at 1.5468
The Euro to US Dollar exchange rate is currently trading at 1.2934
The Euro to Pound exchange rate is currently trading at 0.8057
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