Public deficit already at full-year target in first six months

The public deficit of the Spanish central government in the first half of the year is already at the target for the full year of 3.8 percent of GDP, according to figures released Tuesday by the Finance Ministry.

The European Commission set a target for the shortfall in the country’s finances of 6.5 percent of GDP for the whole of the country’s public administrations. This figure includes a deficit for the regions of 1.3 percent of GDP and of 1.4 percent for the Social Security system.

Finance Minister Cristóbal Montoro noted that in national accounting terms the shortfall in the central government’s first-half books was below the 4.15 percent of GDP in the same period a year earlier. He attributed this to tax hikes approved last year and a relative improvement in the economy, which boosted revenues by 4.6 percent in the period.

In a parallel development, the National Statistics Institute (INE) on Tuesday confirmed an earlier estimate by the Bank of Spain that the economy contracted by only 0.1 percent in the second quarter on a quarterly basis after a decline of 0.5 percent the previous three months. On an annual basis, GDP shrank by 1.7 percent after falling 2.0 percent in the first quarter.

Commenting on the figures, the secretary of state for the economy, Fernando Jiménez Latorre, said the figures represented a “turning point” in the economy that would be maintained in the coming quarters. “The recovery is underway,” he said.

Latorre said the figure left the government on course to meet its target for the year of a fall of 1.3 percent in GDP.