Spain’s growth stagnates
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.