Fall on building stocks fails to dent growth says bank 04/05/2007 00:00

4 May 2007

MADRID – The Bank of Spain says house prices are falling slightly but economic growth remained strong.

It said in the past quarter GDP rose one percent, giving Spain an annual growth rate of 4.7 percent, matching predictions.

The April report said this highlighted the strength of domestic demand, the continued investment in capital goods and the ‘moderate slowdown in investment in the construction industry”.

Household inflation fell to 7.1 percent  - the biggest fall since the start of the present building boom in 1998.

In its monthly report, it said the recent fall of stock prices in the construction sector, which led to predictions of an end to Spain’s property boom, had the positive effect of cooling demand in a country where inflationary pressures were strong.

But it had not dented consumer confidence too much, the bank said.

In April, consumer confidence fell 4.9 points to 94.4 points, after falling in the previous two months.

One negative point was new car sales fell by six percent in April and sales dropped in the first quarter by 1.9 percent.

But overall, the bank concluded the slight slowdown in house prices meant the economy was adjusting to levels of debt and spending which are more sustainable.

[Copyright EFE with Expatica]

Subject: Spanish news