Spain’s GDP set to slide further, bond yields rise anew

Madrid, Spain (4E) – The Bank of Spain said on Wednesday that the country is expected to sink further into recession as economic output reportedly declined significantly in the third quarter.

Spain is among the several nations in the euro area in recession with a record unemployment rate never seen since the 1970s.

The Spanish central bank said in a statement that data for the quarter ending September so far has suggested output has been falling at a “significant rate” with financial uncertainty still at high levels.

During the weekend, economic minister Luis de Guindos stated that the economy will contract at around 0.4 per cent in the third quarter

Borrowing costs also increased on Wednesday upon the announcement of the country’s Catalonia region to hold a snap election coupled with the continuing concerns about the Greek debt crisis and that country’s position in the euro zone.

The benchmark Spanish 10-year bonds saw its yield rise by 0.22 percentage points to 5.93 per cent primarily on rising concerns of further political uncertainty over the future of the economically important Spanish region, which could see itself severed from Madrid to become an independent nation.

In an attempt to control the massive fiscal deficit, the government has introduced unpopular measures including tax hikes and spending cuts.

On Thursday, the government is set to unveil an emergency budget plan and additional austerity measures.

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