Oil prices set to hit Spanish growth

26th October 2004, Comments 0 comments

26 October 2004, BRUSSELS - The European Commission was expected to say Tuesday the Spanish economy will expand by 2.6 percent in 2005 - 0.7 percent less than the level forecast in April.

26 October 2004

BRUSSELS - The European Commission was expected to say Tuesday the Spanish economy will expand by 2.6 percent in 2005 - 0.7 percent less than the level forecast in April.

The commission's economic forecast, due out Tuesday also calls for Spain to post a deficit equal to 0.1 percent of its 2005 gross domestic product, as opposed to the 0.6 percent surplus predicted in April.

In July, Madrid said the nation's economy would grow by 3 percent next year and record a 0.1 percent surplus with respect to GDP.

Last week, Joaquin Almunia, the EU commissioner for Economic and Monetary Affairs, said the commission would revise down its 2005 economic growth forecasts due to rising oil prices.

Almunia told members of the European Parliament on Monday that "the price of oil is now 60 percent higher than that forecast six months ago," adding that the high prices will have "a negative impact on growth this year and next year."

He also predicted that although crude prices would not fall below USD 50 per barrel until sometime in 2005, European economies would be able to "withstand" the high prices because they are still "far below the highs reached in 1981" and EU nations have reduced their "dependence on oil" and become more energy efficient.

In addition, inflationary pressures have not materialized, as occurred during previous run-ups in oil prices, he said.

In April, the commission said the European economy would grow 2.3 percent in 2005, while the economies of EU nations would expand by 2.4 percent.

[Copyright EFE with Expatica]

Subject: Spanish news

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