Euro Stays Stable As Spanish Economy Shrinks Less Than Expected

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 to be slow as citizens continue to protest Madrid’s extensive austerity measures, implemented as per the European Union’s demands. Political squabbles have arisen in Spain regarding the austerity measures’ execution, and Prime Minister Rajoy has pledged to continue his reform plan with further measures to be announced this Friday, the Spanish press reported today. Meanwhile, the S&P rating agency recently took negative action on 16 of the nation’s banks.

The Euro remained largely unaffected by today’s data, which was not significant enough to move markets in a meaningful way. Macro focus remained on Greece, as the chance of the anti-bailout party's gaining ground in the upcoming elections threatened the IMF’s prospects of stabilizing the economy.
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Original Article: http://www.dailyfx.com/forex/market_alert/2012/04/30/Euro_Stays_Stable_as_Spanish_Economy_Shrinks_Less_than_Expected_.html

DailyFX is the forex news and research arm of FXCM (NYSE: FXCM), which provides currency trading and brokerage services and is an advertiser on TheStreet websites. Any opinions, news, research, analyses, prices, or other information is provided as general market commentary, and does not constitute investment advice. Dailyfx will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information. Currency trading involves significant risk of loss. Individual authors may hold positions in the currencies discussed in the article.