(AFP) – Apr 11, 2012
MADRID — Spanish industrial output plummeted in February, official data showed Wednesday, as the recession took tighter hold on the unemployment-scarred economy.
Production by Spain's factories and power generators slumped 5.1 percent in February from a year earlier after smoothing out the impact of seasonal factors, the National Statistics Institute said in a report.
Factories hit the brakes on output of metal parts for making cars, basic iron and steel products and building products such as concrete, cement and plaster.
Overall, it was the steepest fall in industrial production since November last year when Prime Minister Mariano Rajoy's conservative Popular Party won a landslide election victory promising to fix the economic crisis.
Spain is sliding back into recession this year, with the government forecasting a 1.7-percent contraction in gross domestic production after meagre growth of 0.7 percent in 2011.
The unemployment rate, which hit 22.85 percent at the end of last year, is officially forecast to climb to 24.3 percent this year.
Financial markets are showing concern about the sustainability of Spain's sovereign debt which is rising fast because of swollen budget deficits.
Spain has vowed to cut its public deficit -- the shortfall of revenue and spending -- to 5.3 percent of GDP in 2012 and 3.0 percent in 2013 after allowing it to run over target to 8.5 percent last year.
But the deficits are even harder to control in a time of recession and high unemployment, which cuts tax income for the government while increasing the cost of welfare payouts.
Adding to concerns, many analysts predict the government will have to help to shore up the balance sheets of Spanish banks, which overextended themselves in a property bubble that popped in 2008.
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