Nothing good here for our Spanish readers: while speaking at a news conference, Deputy Prime Minister Soraya Saenz de Santamaria said that Spain's economy will contract by 1.7 percent this year as the government carries out drastic austerity measures. The forecast matched the International Monetary Fund's outlook for Spain's economy this year and was less optimistic than the outlooks from the country's central bank and from the European Commission. Earlier, Spain also defied the European Union, setting a 2012 deficit target at 5.8 percent of gross domestic product, a far softer goal than the 4.4 percent agreed with Brussels. More importantly, the country now anticipates that its unemployment rate will hit 24.3%. Frankly, while horrendous and worse even than in Greece (as it also implies a youth unemployment rate well into the 50%s), this is an overoptimistic number, because as noted before, Spain's unemployment soared from 21.5% to 23.3% in Q4 alone. When all is said and done, look for Spain's 2012 YE unemployment to be well over 25%. So as the economic deterioration across the PIIGS accelerates, at least the banks are "safe."
Spain's historical unemployment:
[6]
And other forecast highlights via Bloomberg, citing Spain's De Guindos:
- *SPAIN GROWTH MAY BE NEGATIVE UNTIL THIRD QUARTER INCLUDED
- *SPAIN HOUSEHOLD SPENDING TO DECLINE IN 2012, DE GUINDOS SAYS
- *SPAIN GOVERNMENT FORECASTS 24.3% UNEMPLOYMENT RATE IN 2012
- *SPAIN GOVERNMENT FORECASTS 24.3% UNEMPLOYMENT RATE IN 2012
- *SPAIN HOUSEHOLD SPENDING TO CONTRACT 4 PERCENT IN 2012
- *SPAIN 2012 SPENDING LIMIT SET AT EU118.6BLN
- *SPAIN 2012 SPENDING LIMIT DOWN 4.7% FROM 2011
As we said, nothing good.