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ECONOMY

Madrid hails export-led recession ease-up

Spain's two-year, job-wrecking recession eased in the second quarter of 2013, official data showed on Thursday, as Madrid anticipated an imminent, export-powered end to the downturn.

Madrid hails export-led recession ease-up
The Spanish economy emerged only gingerly from that downturn in 2010 before sliding back into recession in mid-2011.Photo: Pierre Philippe Marcou/AFP

Activity in the eurozone's fourth largest economy shrank by 0.1 percent in the April-June period when compared to the previous quarter, the National Statistics Institute said in a report.

The shallow decline, which compared to a 0.4-percent drop in the first quarter of the year, will raise hopes that Spain is set to shake off a stubborn, double-dip recession that pushed the unemployment rate to 26.26 percent in the second quarter.

A property market crash in 2008 plunged Spain into a recession, destroyed millions of jobs, left banks awash in bad loans and plunged the government deep into debt.

The economy emerged only gingerly from that downturn in 2010 before sliding back into recession in mid-2011.

Prime Minister Mariano Rajoy's conservative government and the Bank of Spain now hope the downward cycle may be close to an end, both saying the economy could post growth in the third quarter, propelled by growing exports and a surge in tourism.

On an annual basis the economy contracted by 1.6 percent in the second quarter following a 2.0 percent decline in the first three months of the year.

The European Commission predicts the Spanish economy will shrink by 1.5 percent this year while the International Monetary Fund forecasts a decline of 1.6 percent.

The statistics agency also reported provisional data showing that inflation slowed in August to 1.6 percent from 1.9 percent in July, as increases in fuel and lubricant prices slowed.

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ECONOMY

Spain’s middle-class youngsters the most likely to end up poor across all EU

Spain leads the ranking of EU countries with the highest risk of young people ending up in poverty as adults, despite coming from families without economic difficulties.

Spain is the fourth EU country with the highest inherited poverty
Spain is EU country with most middle-class young people who end up poor. Photo: Jaime ALEKOS / AFP

Spain is also the fourth EU country with the highest rate of inherited poverty risk, according to Eurostat, the EU Statistical Office.

Data on intergenerational poverty indicates that there is a correlation between the financial situation of the household you grew up in and the risk of being poor when you reach adulthood and in Spain, there is a strong link. 

The latest statistics available from 2019 show that the at-risk-of-poverty rate for the EU was 23 percent among adults aged 25 to 59 who grew up in a poor financial situation at home when they were 14 years old. This is 9.6 percentage points more than those who come from families without financial problems (13.4 percent). 

READ ALSO: Spain’s inflation soars to 29-year high

How the situation in Spain compares with the EU

Spain has become the EU country with the highest risk of poverty among adults who grew up in families with a good financial situation  – 16.6 percent.

This was followed by Latvia with 16 percent and Italy with 15.9 percent.

That statistics also show the countries where it is less likely to be poor after growing up in households without economic difficulties. These include the Czech Republic (5.9 percent), Slovakia (7.9 percent) and Finland (8.5 percent).

The overall poverty rate in the EU decreased by 0.1 percentage points between 2011 (13.5 percent) and 2019 (13.4 percent), but the largest increases were seen in Denmark (1.9 points more), Portugal (1.8 points), the Netherlands (1.7 points) and Spain (1.2 points).  

On the other hand, the biggest decreases in the poverty rate were seen in Croatia (-4 percent), Lithuania (-3.6 percent), Slovakia (-3.5 percent) and Ireland (-3.2 percent).

READ ALSO: Spain’s government feels heat as economic recovery lags

Inherited poverty

The stats revealed that Spain was also the fourth country with the highest rate of inherited poverty risk (30 percent), only behind Bulgaria (40.1 percent), Romania (32.7 percent) and Italy (30.7 percent).

This means that children of poor parents in Spain are also likely to be poor in adulthood. 

The countries with the lowest rate of inherited poverty risk were the Czech Republic (10.2 percent), Denmark (10.3 percent) and Finland (10.5 percent).

The average risk-of-poverty rate for the EU increased by 2.5 percentage points between 2011 (20.5 percent) and 2019 (23 percent), with the largest increases seen in Bulgaria (6 points more), Slovakia and Romania (4.3 points), Italy (4.2 points) and Spain (4.1 points).

The biggest drops were seen in Latvia (-8.5 points), Estonia (-8.0 points) and Croatia (-2.3 points). 

The largest gaps in people at risk of poverty when they reach adulthood were in Bulgaria (27.6 percentage points more among those who belong to families with a poor economic situation as teenagers compared to those who grew up in wealthy households), Romania (17.1), Italy (14.8), Greece (13.5) and Spain (13.4).

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