“Available data for the third quarter of the year suggest output continued to fall at a significant pace, in an environment in which financial tension remained at very high levels,” the bank said in a monthly report released on Wednesday.
The International Monetary Fund (IMF) has predicted economic declines of 1.7 percent in 2012 and 1.2 percent in 2013 for Spain.
On Tuesday, the Spanish police clashed with thousands of demonstrators who had gathered at the Plaza de Neptuno square near the lower house of parliament to protest against the austerity measures adopted to address the financial crisis.
The Occupy Congress demonstration drew an estimated 6,000 people from all walks of life tired of nine straight months of harsh economic austerity measures introduced by the government of Prime Minister Mariano Rajoy.
The worsening eurozone debt crisis has increased Spain’s financing costs and the country is seeking a European Union bailout similar to the one Greece received.
On June 9, eurozone finance ministers agreed to lend 100 billion euros ($125 billion) to Spain to save its teetering banks.