By David Schutz, THE TAKEAWAY: Spanish economy shrank in Q1 -> contraction was smaller than expected -> battle over austerity continues –> Euro largely unaffected Spain’s economy contracted 0.3% in 2012’s first quarter when compared to Q4 2011, the Spanish stats bureau said today. The quarterly contraction in GDP was smaller than the 0.4% markets had expected. The economy shrank 0.4% when compared to this time last year, a smaller contraction than the forecasted 0.6%, today’s release added. The data indicated that Spain is officially experiencing a recession. Spain’s economic recovery is expected tobe slow as citizens continue to protest Madrid’s extensiveausterity measures, implemented as per the European Union’sdemands. Political squabbles have arisen in Spain regarding theausterity measures’ execution, and Prime Minister Rajoy has pledged to continuehis reform plan with further measures to be announced this Friday,the Spanish press reported today. Meanwhile, the S&P rating agency recentlytook negative action on 16 of the nation’s banks. The Euro remained largely unaffected bytoday’s data, which was not significant enough to movemarkets in a meaningful way. Macro focus remained on Greece, as the chance of the anti-bailout party'sgaining ground in the upcoming elections threatened the IMF’sprospects of stabilizing the economy.
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