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Spanish Economy Contracts, 1st Time in 15 Years

Spanish gross domestic product (GDP) fell 0.2 percent in the third quarter, sending the euro zone's fourth-largest economy into contraction for the first time in 15 years, the National Statistics Institute reported on Friday.

The widely-expected drop in quarter-on-quarter GDP compared with 0.1 percent growth in the second quarter and marked the sixth consecutive quarter of declining growth rates, INE said.

The fall was driven by dwindling domestic demand as the collapse of a decade-long housing boom coincided with global credit restrictions, INE said.

Lower spending by firms and households was compensated in part by weaker imports which meant Spain's foreign trade account made a net contribution to growth, INE said.

The last time the economy shrank was in the second quarter of 1993, the final of four quarters of recession during Spain's previous property crisis.

Year-on-year, Spanish GDP increased 0.9 percent in the third quarter after annual growth of 1.8 percent in the April-June period, marking the weakest pace since the fourth quarter of 1993