Spanish exports slowed in June, undermining the only growth driver left in the euro region’s fourth-biggest economy as the strictest austerity push in decades deepened the second recession since 2009.
Spanish exports rose 5.1 percent to 18.9 billion euros ($23.2 billion) compared with a 10.8 percent increase a year earlier and a 6.2 percent increase in May, the Economy Ministry said in a statement from Madrid today. Imports slipped 1.4 percent compared with June 2011 and the country’s trade deficit narrowed to 2.7 billion euros.
Prime Minister Mariano Rajoy’s People’s Party government overhauled Spanish labor rules on Feb. 10, making it easier for companies to cut payroll during a downturn. The move seeks to improve competitiveness while efforts to cut the euro region’s third-largest budget gap weigh on demand.
The government forecasts domestic demand will shrink 4 percent in 2012, more than twice last year’s rate. Public spending is seen contracting 4.8 percent after 2.2 percent last year, while a 24.6 percent unemployment rate will push household spending down 1.5 percent, after a 0.1 percent drop in 2011.
Spain’s economy will contract 1.5 percent as export growth slows to 1.6 percent this year from 9 percent in 2011, the government said on Aug 3.