Spanish economy contracts 1% in second quarter

Official statistics indicate that the economy of Spain, the fourth-largest member of the eurozone, contracted by one percent in the quarter to June. The GDP was 4.1% lower by comparison to this time last year.

However, the rate of the decline was less severe in this quarter than previously, and the government said the figures indicated "relatively better performance."

The numbers are a contrast with the economies of France and Germany, who both saw their GDPs increase by 0.3% in the same time period.

Dominic Bryant of BNP Paribas commented that "this was a bit disappointing and worse than we expected, since a number of indicators had improved in Spain over the last few months.

"We do expect Spain to do worse than other European countries for a few years. Germany and France don't have the same imbalances as Spain, which means we expect it to stay weaker for longer," he added.

Spain's government says, it expects the economy will shrink by 3.6% by the end of the year, but will start growing again in the second half of 2010.