Spain enters recession for first time in 16 years

MADRID, Jan. 28 (Chinese media) -- The Spanish economy is in recession for the first time since 1993 after its gross domestic product (GDP) contracted during the final two quarters of 2008, according to figures released by the Spanish central bank on Wednesday.

The Spanish GDP fell 1.1 percent in the final quarter of 2008, following a 0.2 percent decline in the previous three-month period, the Bank of Spain said.

The traditional definition of recession is two consecutive quarters of negative growth.

"According to available data, the weakening of the Spanish economy intensified in the fourth quarter of 2008," the bank said.

Spain's economy, the fifth-biggest in Europe, had been one of Europe's big successes in recent years after having posted a remarkable GDP growth rate of 3.7 percent in 2007.

But it has been fiercely hit as the global financial crisis affected its construction sector, the mainstay of Spain's economic growth for over a decade.

The government on Friday forecast a fall of 1.6 percent for its GDP this year, slashing its previous forecast of a 1.0 percent growth.

"2009 will be a year with economic difficulties, especially in terms of employment, but there will be encouraging signs of improvement in the second half of the year," Jose Luis Rodriguez Zapatero, Spain's prime minister, told a press conference last month.

On Jan. 16, the Spanish government predicted a 15.9 percent unemployment rate for 2009. The current unemployment rate is 13.9 percent, already the highest in the EU.

The Spanish GDP increased by 1.1 percent on an annual basis in 2008 but it was a sharp slowdown from the growth rate of 3.7 percent in the previous year, the bank said.