MADRID—Spain's central bank said Tuesday the Spanish economy contracted at a
faster pace in the third quarter and the country may miss its budget-deficit
target because of tax-revenue shortfalls.
The euro zone's fourth-largest economy contracted by 1.7% from the same
period last year, compared with a 1.3% contraction in the second quarter, the
central bank said.
In the first estimate of Spain's economic performance during the
July-to-September quarter, the Bank of Spain said that on a quarterly basis
gross domestic product likely contracted 0.4%, the same as in the second
quarter. The central bank's estimates are often very close to or in line with final
government estimates issued later. The government's first third-quarter GDP
estimate is due Oct. 30.
The central bank also said that "it can't be ruled out" that Spain's
government would miss its budget deficit target for this year, currently at 6.3%
of GDP after a series of revisions, largely because of tax-revenue shortfalls.
Last year, Spain's deficit stood at 9.4% of GDP, more than three percentage
points above the target.
"The efforts to lower spending at the public sector have had a net
contracting effect (on the economy) in the central months of the year," the Bank
of Spain said. "We see drops in consumption and investment by all levels of
government above those seen in previous quarters."
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