Capital flight from Spain at €31.9bn in May

Capital flight from Spain accelerated in May and outflows reached €41.3bn during the month, according to data published today by the Bank of Spain.

Domestic banks moved €31.9bn euros out of the country during the month, an increase from €26.6bn in April.

Between January and May, outflows were €163bn, approximately 16% of economic output, and the trend gained pace in May as the Spanish government announced the decision to bail out Bankia, one of the biggest lenders of the country.

Over the last 11 months, money weighting for 26% of GDP exited the country, with both families and businesses moving funds to foreign accounts.

Spain’s government expects the economy to shrink 1.5% in 2012 and 0.5% in 2013. It recently approved severe cuts to reduce its budget deficit, which are likely to fuel further capital outflows from the system.

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