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Recession batters Spain as protests grow

Dec 28 2012 14:39 AFP

Police shoot rubber bullets at protestors during the demonstration at the parliament against austerity measures announced by the Spanish government in Madrid. (AP)

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Madrid - Battered by high unemployment and a banking crisis, Spain remains stuck in recession in the final quarter of 2012, the central bank said Friday.

The eurozone's fourth-largest economy has been shrinking since mid-2011, pushing unemployment above 25%, and the outlook remains grim with a further contraction expected next year.

"The most recent data for the final quarter of the year, although still incomplete, points to a continuation of the fall in economic activity as a result of the contraction in domestic demand," the Bank of Spain said in a monthly report.

The central bank pointed to indicators showing weak consumer confidence and retail sales, mixed fortunes in industry and a construction sector still reeling four years after a spectacular property market crash.

Spain's gross domestic product, its total economic output, fell by 0.3% in the third quarter of the year, according to official data.

The government is tipping an economic slump of 1.5% this year.

It also forecasts a 0.5% contraction in 2013, but this is widely viewed as being optimistic. The European Commission and OECD, for example, say they expect Spanish economic output to tumble 1.4 percent next year.

Protests are growing in Spain as people decry the economic slump, unemployment and a series of austerity measures adopted by Prime Minister Mariano Rajoy's right-leaning government. Massive aid to a bad-loan ridden and widely scorned banking sector has stirred further anger.

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