MADRID - Spain's jobs-scarce economy plunged back into recession in the first quarter of 2012 as employment slumped even further, the Bank of Spain said Monday.
Barely two years after emerging from the last downturn, Spain slid into recession again with two consecutive quarters of economic contraction, the central bank said in a report.
Gross domestic product fell by an estimated 0.4-per cent in the first quarter of 2012 after a 0.3-per cent decline in the last three months of 2011, the bank said.
Spain, whose unemployment rate at the end of 2011 was already the highest in the industrialised world at 22.85 per cent overall and nearly 50 per cent for the young, suffered a further sharp jobs decline.
"Employment fell again, sharply, with an estimated year-on-year decline of 4.0 per cent," the report said, noting also a "significant" decline in unit labour costs.
The government forecasts the jobless rate will rise to 24.3 per cent this year as the sagging economy struggles to absorb millions of jobs destroyed in the collapse of a property boom in 2008.
The European Central Bank had helped to ease market tensions, Spain's bank said, alluding to the ECB's decision to extend more than one trillion euros in low-interest, three-year loans to the region's banks.
Worries were further soothed by an international rescue programme for Greece, the restructuring of Greek debt and eurozone economic governance reforms, it said.
"Nevertheless, the instability returned in the first days of April, affecting Spain and Italy with particular strength, because of doubts raised by the adjustment process in which both countries find themselves."