Spanish GDP falls for 6th consecutive quarter, but at slower pace, central bank says

Spain’s economy seen contracting further

MADRID — Spain’s recession-plagued economy contracted for a sixth consecutive quarter in the last three months of 2009, although the rate of decline is easing, the Bank of Spain said Friday.

The 0.1 percent drop in gross domestic product is a blow to government predictions that the country would climb out of technical recession at the end of 2009, as other major European economies have.

Late Friday the government announced its latest proposals to try and stimulate the jobs market.

After a meeting with representatives of the country’s leading business federation and trade unions, Prime Minister Jose Luis Rodriguez Zapatero said his government would focus on creating employment for the young.

Zapatero said agreements should be arrived at with employers whereby workers could downshift to part-time work as well as making it easier to relocate people who had lost their jobs.

Zapatero said his government would aim to reduce benefits employers must pay in case of unemployment from 45 days pay for each year worked down to 33. However, the reduction would apply only in certain cases and not across the board.

The Spanish economy shrank 0.3 percent in the third quarter compared to the second, according to the government data.

For all of 2009, the bank estimated that Spain’s economy contracted 3.6 percent, in line with government forecasts.

The Bank of Spain’s figures are separate from the official figures published by the government, due out in the next few days.

Spain’s once-buoyant economy has wracked up six straight quarters of decline since third quarter of 2008 as a boom fueled by real estate construction and consumer spending collapsed. Unemployment now stands at nearly 20 percent.

The government’s ballooning deficit is an acute source of worry for investors and markets fretting over whether Spain could be in line for a debt crisis like the one in Greece.

The government had been hit by more bad news Thursday from a poll which said opposition conservatives would win if elections were held now. Zapatero has been in power since 2004.

The Popular Party now has a 3.8-point lead over his Socialists, up from 3.3 points in October, in the survey by the state-run Center for Sociological Research.

A record 82.7 percent of those polled now feel that unemployment, as opposed to violent Basque separatism or other issues, are Spain’s biggest problem, the poll said. A total of 2,500 people took part and the margin of error was 2 percentage points.