Spain June Export Growth Slows Amid Worsening Recession

 

Spanish exports slowed in June, undermining the only growth driver left in the euro region's 4th-biggest economy as the strictest austerity push in decades deepened the second recession since 2009.

Spanish exports rose 5.1% to €18.9 billion compared with a 10.8% increase a year earlier and a 6.2% increase in May, the Economy Ministry said in a statement from Madrid today. Imports slipped 1.4% compared with June 2011 and the country's trade deficit narrowed to €2.7 billion.

Prime Minister Mariano Rajoy's People's Party government overhauled Spanish labor rules on Feb. 10, making it easier for companies to cut payroll during a downturn. The move seeks to improve competitiveness while efforts to cut the euro region's 3rd-largest budget gap weigh on demand.

The government forecasts domestic demand will shrink 4% in 2012, more than twice last year's rate.

Public spending is seen contracting 4.8% after 2.2% last year, while a 24.6% unemployment rate will push household spending down 1.5%, after a 0.1% drop in 2011.

Spain's economy will contract 1.5% as export growth slows to 1.6% this year from 9% in 2011, the government said on Aug 3.