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(CEP News) Frankfurt - The Spanish recession deepened in the first quarter, with overall economic growth contracting at a pace unseen in nearly 40 years, the Bank of Spain reported.
In its monthly report published on Wednesday, the central bank noted that Spain's economy shrank by 1.8% between the first quarter of 2009 and the last quarter of 2008, when GDP declined 1.0%. Year-over-year, the economy contracted 2.9% in Q1, surpassing Q4's 0.7% slide. Both the quarterly and annual rates are the most pronounced since 1970. The Bank of Spain also said price growth will remain in negative territory this year. However, it added that there are no risks of deflation in either Spain or in the euro zone as a whole. "The risks of deflation in Spain are only those that may exist for the euro region overall, which according to the Governing Council of the European Central Bank, are remote," the Bank said in its report. The bank also said the government has "scarce" room for additional stimulus measures, forecasting the public deficit to rise to 8.3% of GDP in 2009. Written by CEP News European Staff,
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