Economy looking at more stable growth, minister says

11th January 2008, Comments 0 comments

Solbes said GDP slowed to 3.5 percent in last quarter of 2007.

11 January 2008

MADRID - Economy Minister Pedro Solbes yesterday said economic activity in Spain was undergoing a gradual slowdown due to a less favourable international environment and an adjustment in the property sector, but added that this would lead to more balanced growth.

Solbes estimated that GDP grew an annual 3.5 percent in the last quarter of the year, compared with 3.8 percent in the third quarter. That put the economy on track for full-year 2007 growth of 3.8 percent, in line with the government's target. It expects GDP to grow 3.1 percent this year.

"A gradual slowdown is taking place, which has its roots in a less favourable international environment and a gradual adjustment in the property sector," Solbes said in testimony to the congressional committee on the economy. He said this was a "healthy" development as it would lead to more sustainable and balanced growth, with activity drawing more on "productivity."

With only two months to go before general elections, the economy has become the main focus of debate in the wake of a spate of negative indicators. Prime Minister José Luis Rodríguez Zapatero on Wednesday defended his government's handling of the economy in the face of claims by the opposition that it had squandered the benefits of an economic bonanza.

The National Statistics Institute said yesterday that industrial output fell in November for the first time in two years as a result of higher borrowing costs sparked by a credit crunch in the wake of the US subprime mortgage crisis. Corrected for calendar effects, production in the month was down 0.6 percent. In the 11 months to November output was up 2.3 percent.

[Copyright EL PAÍS / Adrián Soto 2008]

Subject: Spanish news

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