MADRID — A record drop in retail sales added to Spain’s economic woes Tuesday as the government struggled to boost market confidence in the crippled banking industry and investors remained doubtful of the country’s ability to get a grip on its debts amid a recession.
Retail sales dropped 9.8 percent in April, compared with a year ago, as the country battled against its second recession in three years and a 24.4 percent jobless rate that is expected to rise. The fall in sales was the 22nd straight monthly decline and was more than double the 3.8 percent year-on-year fall posted in March, the National Statistics Institute reported.
A gloomy Bank of Spain report heaped more bad news on the government. The central bank said it predicts the economy will keep shrinking at least until the end of June, after contracting 0.3 percent in the first quarter, as Spain endures a double-dip recession. The government has predicted a 1.7 percent contraction for the whole of 2012.
The interest rate, or yield, on Spanish 10-year bonds rose to 6.45 percent, moving closer to the 7 percent seen as unsustainable. The IBEX stock index closed down 2.3 percent, the steepest fall among Europe’s main markets.
Bank of Spain governor Miguel Fernandez Ordonez announced after markets closed that he is stepping down a month before his term ends in mid-July. The central bank said in a statement that Ordonez decided a new governor should be in place by June 11, which is the deadline for Spanish banks to provide the government with their recovery plans as part of an expected wholesale reform of the country’s financial system.
The conservative government, which came to power in December, has made little effort to hide its belief that Ordonez, who as governor has had oversight of the banking sector, is partly to blame for Spain’s economic mess.
