Modern Agbar tower next to old buildings in Barcelona

The Spanish economy will contract 0.7 per cent this year according to the Foundation of Savings Banks (FUNCAS) returning to negative growth in the third and fourth trimester, which will suppose the return of the technical recession (two consecutive trimesters of negative growth).

Nevertheless, FUNCAS believes that GDP will return to positive territory in 2011, albeit at “very moderate levels”. GDP in 2011 is predicted to be 0.3 per cent, saying the latest FUNCAS report.

Although the new fiscal adjustments announced by the Government preview improvement, Funcas does not share the official estimates which point to a deficit of 9.3 percent of GDP by 2010 and 6.0 percent in 2011.

According to the foundation, Spain will close 2010 with a deficit of 10.1 percent of GDP and by 2011 expects a deficit of 6.9 percent.

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