Spain has been through nine straight quarterly economic contractions, but after nearly two painful years the euro zone’s fourth-biggest economy has finally come out of recession with third-quarter growth up 0.1 percent, the Bank of Spain said Wednesday.
The country's rate of unemployment and increased poverty is now at its slowest since the global financial crisis in 2008. This will be seen as a victory for the ruling conservative party that has pushed through deeply unpopular spending cuts during its two years in power.
But Spain is not out of the woods yet. Unemployment was still high, at 26.3 percent in the second quarter, representing the second-worst rate in Europe behind Greece, according to the Bank of Spain's latest figures.
The news, hot on the heels of Ireland’s and Portugal’s escape from recession during the first quarter, leaves Europe with six countries still in the doldrums of a recession: Cyprus, Estonia, Greece, Italy, the Netherlands and Slovenia. The only reason Europe is out of recession is thanks to big second-quarter growth in countries like Germany and France and serious improvement in some of the smaller ones that were hit hard by declining global finance.
Like Spain, many of the countries that have got out of recession still suffer badly from unemployment and huge public debts. Here are some European countries that are still struggling with a recession.
Greece’s economy remains in recession, contracting 4.6 percent in the recently completed quarter compared to a year earlier. Growth is expected in the fourth-quarter but meanwhile the nation remains in a depression, according to Barry Bosworth, economist at the Brookings Institute. "It goes way beyond anything that looks like a recession," he said. "It's absolutely appropriate to refer to Greece as in a depression."
As business bankruptcies have skyrocketed, the economy has shrunk by around 24 percent since 2008, leaving unemployment at a record 27.6 percent and 65 percent for individuals under 25.
The government, under instructions from the European Union and the International Monetary Fund, has attempted many rounds of austerity to secure bailouts from the EU and the IMF.
The Italian economy has contracted for eight straight quarters and unemployment hovers around 12 percent. However, it did shrink by less than expected in the third quarter. The country has embarked on an austerity budget to get a grip on its massive public debt, which has grown to 130 percent of annual economic output.
The future doesn’t look bright for the Italian economy, in part because of political upheaval that many believe will render any sitting government too weak to push through effective reforms required to reduce debt and grow the economy.
The troubles of the small Mediterranean country were a direct result of the failing Greek economy; Cyprus needed to rescue its banks after they collapsed off the back of the defaulted Greek government bonds. Because deposits at one of the banks were seized to help pay for the bailout, it’s expected that this will spook investors and consumers.
It is expected that the Cypriot economy will shrink by 13 percent in 2014, but some analysts quoted in the media expect the contraction to be far worse.