Bank in warning over consumer spending

16th August 2004, Comments 0 comments

16 August 2004, MADRD — The "uncertainty" over economic growth and questions such as the sustainability of social benefits could continue to have an "unfavourable effect" on spending in eurozone (EMU) countries this year, says the Bank of Spain.

16 August 2004

MADRD — The "uncertainty" over economic growth and questions such as the sustainability of social benefits could continue to have an "unfavourable effect" on spending in eurozone (EMU) countries this year, says the Bank of Spain.

In its latest report, the Bank points out that private spending by families represents the biggest portion of Gross Domestic Product in the EMU countries – equivalent to around 57 percent.

There had already been signs of weakness since 2001, which were difficult to explain given the standard criteria of disposable income, interest rates and the wealth of families.

Among factors that could encourage savings, and therefore reduce public consumption, the Bank pointed to the deterioration of public finances, the uncertainty over pensions and healthcare because of population aging, and negative growth perspectives.

Yet despite more positive figures for Spain for the first quarter of 2004, the Bank said it could not "discount unfavourable effects" on family spending because of the doubts over economic growth and the maintenance of social benefits.

Most indicators pointed to a gradual and slow process of recuperation in the economy, but remaining below the average for the last decade, it added.

[Copyright EFE with Expatica]

Subject: Spanish news

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