IMF forcasts recession in Spain

The IMF has forecast that the Spanish economy will contract by 1.3 percent next year - more than double its previous predictions. And Spanish regions continute to ask for more funds, as the government prepares to make budget cuts.
The pace of life looks slow in Seville but the same can’t be said for the developing economic crisis in Spain.
The city is the capital of Andalucia - the sixth Spanish region to seek a government bailout.
It wants almost 5 billion euros from an already stretched regional fund.
Europe’s leader have again insisted the euro zone fourth largest ecoonomy won’t need an international bailout.
And Spain’s finance minister, Luis de Guindos, meeting colleagues in Luxembourg, says he’s not under pressure to make more cuts.
Luis De Guindos, Spanish Finance Minister, said, "There was a positive evaluation of Spain’s economic policy and the need to carry out a fiscal adjustment that is sensitive and sensible."
But many Spaniards and the IMF aren’t so confident.
Spain’s latest crisis budget met with protests at the weekend, and the IMF now says Spain will still miss its deficit targets this year and next.
It also expects the economic contraction to be greater in 2013 than the government forecasts.
But market pressure is the key.
Jeremy Batstone Carr from Charles Stanley says investors have already factored in a bailout and that is actually helping them avoid one - for the time being.
He said, "The more likely the markets believe Spain’s formal request for a bailout to be, the lower Spanish bond yields fall, and the less pressure on Spain to take part in a bailout immediately."
Spain’s banking crisis is at the heart of its problems.
And finance ministers from the euro zone agreed, on Tuesday, to a tax on financial transactions, to show they’re prepared to make Europe’s banks pay for their part in the financial crisis.