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									                                                                                   Nazmus Sakib
                                                                                ID: 091-0866-030

                                       MGT372; Sec – 9
                                           Journal #1

Markets fall as Bank of Spain warns on economy


         Spain’s LBEX index was down 3.5% while markets in London, Paris and Frankfurt
were down by nearly 1%. Earlier the Bank of Spain published report about continued shrink of
Spanish economy in the third quarter of the year. Fall of LBEX index is just a part of the whole
economic downfall of Spain. With the highest unemployment rate since the 1970s, Spain is in
deep recession and worries are growing among public increasing the borrowing cost. As a result
GDP keeps falling at a significant rate.


         Spain’s economy is doing badly for recent months. Country’s deficit is very high. In
order to eliminate the current deficit, the Spanish government has introduced spending cut and
tax rises. An emergency budget is also called by the government. But the budget may not be
accepted warmly by the markets. Austerity that the budget proposes is denied by the people
who have raised protest. At present the unemployment rate is around 25% and people have
already cut expense and can bear no more simplicity in their living standard.

         An international bailout of 100bn euro has already been approved for Spain and more
concern has risen that Spain may need more than that to sustain in recession. But Prime
Minister Mariano hasn’t yet asked for a bailout. Experts have been worried about PM’s
reluctance of requesting the bailout where the European Union has already asked one to save its
                                                                                  Nazmus Sakib
                                                                               ID: 091-0866-030
        On Bank of Spain’s monthly journal, a report on condition of Spain’s unstable economy
discussed above was published. In the report they forecasted significant growth of
unemployment and interest rate. This news immediately affected the LBEX index causing a 3%


        Spain’s bad economic condition is just a illustration of Europe’s total economic
downfall. Protests are breaking out in Madrid, Greece, Catalonia, Portugal and Spain as well. It
is a sign that Europe is in trouble and they need to take immediate action to come out fine.


BBC online; 26 September 2012

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