Spain's public deficit target for 2013 reached by July

 

The public deficit of the Spanish central government in the first half of the year is already at the target for the full year of 3.8% of GDP, according to figures released Tuesday by the Finance Ministry.

The European Commission set a target for the shortfall in the country's finances of 6.5% of GDP for the whole of the country's public administrations. This figure includes a deficit for the regions of 1.3% of GDP and of 1.4% for the Social Security system.

Finance Minister Cristóbal Montoro noted that in national accounting terms the shortfall in the central government's first-half books was below the 4.15% of GDP in the same period a year earlier. He attributed this to tax hikes approved last year and a relative improvement in the economy, which boosted revenues by 4.6% in the period.

In a parallel development, the National Statistics Institute (INE) on Tuesday confirmed an earlier estimate by the Bank of Spain that the economy contracted by only 0.1% in Q2 on a quarterly basis after a decline of 0.5% the previous 3 months. On an annual basis, GDP shrank by 1.7% after falling 2.0% in the first quarter.

Commenting on the figures, the secretary of state for the economy, Fernando Jiménez Latorre, said the figures represented a "turning point" in the economy that would be maintained in the coming quarters. "The recovery is underway," he said.