Spain Budget Deficit Soars
MADRID--Spain's government said late Monday the country's budget deficit stood at 5.3% of gross domestic product in
the first seven months of the year, an indication that the euro zone's fourth-largest economy may miss its deficit
target for the fourth consecutive year.
Spain is looking to bring its budget deficit to 6.5% of GDP this year, down from 10.6% last year. The target, set by
the European Union Commission, was already relaxed earlier this year from a previous 6.3% of GDP, but many economists
say even the easier target may be hard to attain, as the economy was in recession at least until the second quarter, and
only moderate economic growth is anticipated in the second half, which should keep tax receipts at low levels.
Just Monday, think tank Funcas said 19 economists surveyed were expecting, on average, that the economy will grow 0.1%
in the third quarter from the second, and Spain will post a budget deficit of 6.7% of GDP for the full year. The
economists surveyed are also expecting that Spain will miss next year's deficit target, of 5.5% of GDP.
This is important because a string of large deficits has driven Spain's government debt to the highest level in over a
hundred years. Last week, the country's central bank said debt stood at 92.2% of GDP as of June--well above the year-end
target of 91.4% of GDP.
This reinforces the view held by many private sector economists, and the International Monetary Fund, that Spain's
government debt will rise significantly above 100% of GDP before it peaks, despite government assurances to the
As of the end of June, Spain's budget deficit was at 4% of GDP. The numbers don't include data from town and city-
Write to David Roman at firstname.lastname@example.org Twitter: @dromanber
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