Economic growth will be disappointing: Caruana
18 April 2006, MADRID — The Spanish economy is expected grow slightly less than had been predicted this year, said the governor of the Bank of Spain.
18 April 2006
MADRID — The Spanish economy is expected grow slightly less than had been predicted this year, said the governor of the Bank of Spain.
Jaime Caruana told a meeting organised by the Spanish business newspaper Cinco Dias that in 2006 the country would be less competitive.
He said: "The Spanish economy in 2006 will grow slightly less than in 2005, due to imbalances such as the loss of competitiveness, and high asset prices such as housing."
In 2005, Spain's economy grew by 3.4 percent.
Caruana added housing prices should come down to more realistic levels, but not straight away.
Analysts say the Spanish property market is in a bubble that is ready to burst.
Caruana said: "House prices in Spain are high and housing is overvalued, but we expect a soft correction."
He said he expected gross domestic product (GDP) in the eurozone to increase in 2006 from 2005 and move closer to its potential.
"Eurozone GDP through 2006 will rise at a rate that is superior to the previous year and will be growing close to its potential," he said.
"Maybe, what is worrying, is that potential growth in the euro-zone is very low."
[Copyright EFE with Expatica]
Subject: Spanish news