Spain’s economy contracted more than forecast in the second quarter, suggesting a recovery in Germany and France has yet to reach a country that was once an engine of growth for the euro region.

Gross domestic product declined 1 percent from the previous quarter, when it shrank 1.9 percent, the Madrid-based National Statistics Institute said in an e-mailed statement today. From a year earlier, it contracted 4.1 percent. The Bank of Spain estimated on July 30 that the economy contracted 0.9 percent in the second quarter and 4 percent from a year earlier.

Spain’s recovery is lagging behind that of other European countries as data yesterday showed the German and French economies both resumed expansion in the second quarter. Battling the collapse of a domestic housing boom and Europe’s highest unemployment rate at 18 percent, Spain is using stimulus measures worth 2.3 percent of GDP to support the economy as it puts builders to work on public projects across the country.

“Until the end of 2010, we definitely see Spain continuing to under perform the rest of Europe,” said Giada Giani, an economist at Citigroup Global Markets in London from BLOOMBERG.

We still have a LONG, LONG way to go in Spain: For sure, we do not see any Green Shots !!!