Spain’s growth stag­nates

The Myanmar Times - - International Business -

SPAIN’S eco­nomic growth stag­nated in the sec­ond quar­ter as the coun­try re­mains mired in po­lit­i­cal limbo af­ter two in­con­clu­sive gen­eral elec­tions.

The Ine statistics agency said that GDP ex­panded by 0.8 per­cent com­pared to the pre­vi­ous three months – slightly higher than the 0.7pc es­ti­mate it had pre­dicted in July.

The 0.8pc growth in the sec­ond quar­ter was the same as that of the first three months of 2016.

Com­pared to the same pe­riod in 2015, the econ­omy rose 3.2pc from April to June – a slower rate than the first quar­ter when the econ­omy grew 3.4pc year-on-year, due to slower do­mes­tic de­mand, the Ine said.

Over­all, Spain, which has been with­out a fully func­tion­ing gov­ern­ment for eight months, fore­casts that the econ­omy will grow 2.9pc in 2016.

The prob­lems started af­ter elec­tions on De­cem­ber 20 failed to give any party an ab­so­lute ma­jor­ity, as up­start group­ings Ci­u­dadanos and Pode­mos shook up Spain’s long-es­tab­lished two-party sys­tem.

Ef­forts to forge a coali­tion were un­suc­cess­ful as ri­val par­ties were un­able to over­come their dif­fer­ences, prompt­ing re­peat elec­tions in June with a sim­i­lar re­sult.

Act­ing Prime Min­is­ter Mar­i­ano Ra­joy, whose con­ser­va­tive Pop­u­lar Party came first with­out an ab­so­lute ma­jor­ity, is ne­go­ti­at­ing to try to form a gov­ern­ment but faces an up­hill chal­lenge as most other par­ties refuse to back him.

The block­age comes at a sen­si­tive time, as the coun­try is only just emerg­ing from a dam­ag­ing cri­sis.

Its econ­omy grew at one of the fastest paces in the euro­zone last year, with GDP ris­ing 3.2pc.

Un­em­ploy­ment in Spain has also dropped to its low­est rate in nearly six years, reach­ing 20pc in the sec­ond quar­ter – still the sec­ond-worst rate in the Euro­pean Union af­ter Greece.

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