Bank of Spain says economic slowdown more "pronounced"

28th February 2008, Comments 0 comments

The Bank of Spain said yesterday the slowdown in the domestic economy seen toward the end of last year had become more "pronounced" at the start of this year

28 February 2008

MADRID - The Bank of Spain said yesterday the slowdown in the domestic economy seen toward the end of last year had become more "pronounced" at the start of this year as the credit crunch unleashed by the US subprime crisis made itself felt.

"The most recent figures point to a somewhat more pronounced slowdown in activity at the start of 2008 within an environment in which tensions in the international financial markets have heightened," the central bank said in its monthly economic bulletin for February.

The bank highlighted a prolonged slump in consumer confidence to levels in January last seen in May 1994.

It also highlighted a 25.8-percent drop in building permits for homes as a result of a marked slowdown in the property sector. The bank pointed to an increase in the number of jobless claims in the construction sector and a fall in cement consumption.

Annual growth in Spain's GDP slowed to 3.5 percent in the last quarter of the year from 3.8 percent in the previous three months.

Activity for the whole of 2007 increased by 3.8 percent. The government is predicting GDP growth for this year of 3.1 percent. The International Monetary Fund (IMF) is predicting an increase of 2.7 percent. The European Commission also lowered its forecast for Spain to the same figure as the IMF from a previous estimate of 3.0 percent.

The Bank of Spain report underscored the "high degree of solvency" of the domestic financial sector.

[Copyright EL PAÍS / ADRIAN SOTO 2008]

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