Spain joins trillion-euro economy league in 2007
But activity continued to slow in fourth quarter21 February 2008
MADRID - Spain's GDP exceeded EUR 1 trillion last year for the first time ever after growing on average 3.8 percent, according to figures released Wednesday by the National Statistics Institute.
But alongside its euro-zone partners, it is now facing a more challenging time in the wake of the credit crunch sparked by the US subprime crisis and a looming recession in the United States.
Commenting on the figures, the secretary of state for the economy, David Vegara, said Spain was "better prepared than ever" to meet those challenges.
The INE confirmed an earlier estimate of annual growth in the economy for the final quarter of the year of 3.5 percent. While that figure was one of the highest in Europe, it confirmed a downward trend seen from the end of the second quarter when GDP was up 4.0 percent year on year.
The main reason for the slowdown was a deceleration in growth in domestic demand from 4.5 percent to 3.9 percent. This was partly offset by an imposed performance by the foreign sector as the negative contribution of net trade - exports minus imports - narrowed to 0.4 points from 0.7 points.
Vegara described the figures as "clearly positive," adding that they pointed to a "gradual slowdown in activity." The official said there was not yet enough information available to gauge how events are going this year, for which the government is still predicting strong GDP growth of 3.1 percent. "We are not questioning that the situation is more complex," he said. But Vegara added that Spain's national accounts were in a healthy state, and unlike other countries could draw on a budget surplus to boost public spending if things took a turn for the worse.
With the state economy at the forefront of the political agenda ahead of general elections on 9 March, the opposition Popular Party had questioned the INE's initial GDP estimates and insinuated they had been massaged to favour the government.
The PP's economic spokesman, Miguel Arias yesterday said the breakdown of the GDP showed a strong deceleration in the economy especially in private consumption and in investment in equipment and construction.
Growth in private consumption slowed to an annual 2.7 percent in the fourth quarter from 3.1 percent in the third, while construction eased to 2.9 percent from 3.8 percent. Investment in capital goods slowed to 8.6 percent from 11.6 percent.
[Copyright EL PAÍS / ADRIAN SOTO 2008]
Subject: Spanish news