Madrid.—The Spanish economy shrank by 0.3 percent in the final quarter of 2011 from the previous three-month period, leaving it on the brink of recession, provisional data showed yesterday.

The eurozone's fourth-biggest economy grew by 0.7 percent over 2011 as a whole, the national statistics institute said, adding to the year's bleak figures which included an unemployment rate of of 22.85 percent.

It was the first quarterly decline since the fourth quarter of 2009 and it confirmed predictions by the government and the central bank that the Spanish economy is heading back into recession.

A return to recession will make it harder for Spain's new right-leaning government to meet its goal of slashing the public deficit to 4.4 percent of output this year from around 8.0 percent last year.

During the fourth quarter, economic activity experienced a “more negative contribution from internal demand, which was compensated in part by the positive contribution from exports which rose when compared with the previous quarter,“ the statistics office said in a statement.

The Bank of Spain predicted last week that the economy will fall into recession this year with a contraction in activity of 1.5 percent before recovering by about 0.2 percent in 2013.

The central bank had previously estimated in March that the economy would expand by 1.5 percent this year.

Spain emerged only at the start of 2010 from an 18-month recession that was triggered by the global financial crisis and a property bubble collapse.
The national statistics institute is to publish final gross domestic product figures for the fourth quarter on February 16. The Balearic government believes that the local economy should perform much better than other mainland areas. However, the local economy is expected to enter recession this quarter.