MADRID Spain's central bank said Tuesday the country's economy continued to shrink, contracting by 0.4 percent during the third quarter compared with the previous three months, increasing pressure on Prime Minister Mariano Rajoy to seek help from Europe.
This is the fifth quarter in a row that Spain's economic output has shrunk. The country's economy also contracted by 0.4 percent in the second quarter and 0.3 percent in the first quarter and is forecast to show a 1.5 percent fall this year and 0.5 percent in 2013.
The central bank figure is an estimate. Official figures are due to be released by the National Statistics Institute on Oct. 30.
The bank said consumer demand fell by 1. 2 percent - although the decline eased a little in the third quarter due to increased spending ahead of a sales tax increase on Sept. 1.
Spain is in its second recession in three years with near 25 percent unemployment. The country is one of the focal points in Europe's financial crisis -- if Spain defaults on its debts or needs a full-blown bailout, the finances -- and credibility- of the 17-country group that uses the euro could be stretched to breaking point.
In September the European Central Bank said it was prepared to buy unlimited amounts of bonds in countries struggling with their debts. This has helped the country by pushing its borrowing costs lower. But Rajoy has held off triggering the actual purchases.
The government has introduced austerity measures and financial and labor reforms in a bid to convince investors it is getting a grip on its accounts. The measures have led to many strikes and protests and the country faces its second general strike in a year Nov. 14.
Several thousand people are expected to take part in a demonstration later Tuesday outside Parliament as deputies begin debating 2013 budget spending cuts. Two similar protests are planned for Thursday and Saturday.
Also Tuesday, the Treasury sold 3.53 billion euro ($4.61 billion) in three- and six-month bills as investors continued to express their concern over Spain's ability to manage its finances.
The Treasury sold 967 million euro in three-month bills with the average interest rate at 1.42 percent, up from 1.20 percent in the last such auction Sept. 25.
It sold 2.56 billion euro in six-month bills on a yield of 2.02 percent, down from 2.21 percent Sept. 25.
Demand was more than four times the amount offered in the three-month category and almost double in the longer-term bills.