The Catalan economy grew by 0.7% in 2011 but contracted by 0.4% in the last quarter

Barcelona (ACN).- The Catalan Finance Minister, Andreu Mas-Colell, announced on Thursday at the Catalan Parliament that Catalonia’s economy grew by 0.7% in 2011. However, he also announced that the Catalan economy shrunk by 0.4% over the last quarter of 2011. Mas-Colell also explained that in light of the latest data and forecasts for 2012, the Catalan Finance Ministry would have to revise Catalonia’s growth perspectives for the current year, which indicate that the forecasted 0.8% growth appears difficult to reach. In fact, also on Thursday, the Spanish National Institute for Statistics (INE) explained the causes for the 0.3% drop of Spain’s economy over the last quarter of the year, which leaved the Spanish economy growth in 2011 at 0.7%.  “The contraction of domestic demand”, with a fall in domestic consumption (-1.1%) and that of the public sector (-3.6%) being the main causes, together with the loss of 570,000 jobs. Some hours later, the Spanish Deputy Minister for the Economy, Fernando Jiménez Latorre, stated that Spain might be in a recession in the first quarter of 2012. Jiménez Latorre explained that data for this first term of the year “will be similar or a bit worse” than that of the last quarter of 2011, when the economy shrank. Two consecutive quarters with negative economic growth is the technical definition of economic recession.

The Catalan Finance Minister, Andreu Mas-Colell, explained that the Government would have to review Catalonia’s growth forecasts for 2012. Calculations were made with data from July and, since then the sovereign debt crisis has hit European economies hard. Mas-Colell said that, in order to control the deficit, the Catalan Government would have to spend “with caution” over the first months of the year, in case further budget cuts are needed.

Mas-Colell has also reacted to Moody’s downgrading of Catalonia’s debt, announced today. The Catalan Finance Minister stated that the main problem is not the qualifications of a specific agency such as Moody’s, but the general economic context of recession with the inclusion of Belgium, the Netherlands and Italy. Mas-Colell has said that Moody’s has downgraded the debt of 81 regional and local governments throughout Europe. “What will be surprising is the absence of correlation between the rating agency qualification and the general economic situation”, he affirmed. He insisted that “the Catalan Government is doing the required work, a rigorous work”, but “it is obvious that the economic entourage is not the best one”.

The consumption of Spain’s public sector decreased by 3.6% in 2011

The INE released on Thursday the details of the economic growth data for 2011. The fall in domestic consumption (-1.1%) and in the public sector (-3.6%) have been a break to economic growth. Furthermore, the worst effect is that the Spanish labour market has lost 570,000 jobs during last year.