Worrying signs persist despite 3.5pc growth: Bank
4 May 2006, MADRID — Despite Spanish of 3.5 percent during the first quarter of the year there are signs of an economic slowdown, the Bank of Spain said.
4 May 2006
MADRID — Despite Spanish of 3.5 percent during the first quarter of the year there are signs of an economic slowdown, the Bank of Spain said.
The Bank said year-on-year, Spain's economy expanded by 3.5 percent compared with the same period last year.
This was due mainly to growth of 0.8 percent increase in growth between January and March, compared with the previous three months.
In its regular monthly report, the Bank said there were signs of a deceleration in growth.
Domestic demand and the construction industry continue to be the main motors of the Spanish economy.
They have made the biggest contribution to the increase in the country's GDP.
But the report said the rising mortgage interest rates have forced many families to cut domestic spending.
Despite the slowdown in house prices, families were still not doing enough to prevent themselves taking on too much debt.
Household debt has risen above 20 percent in the first three months of 2006.
This has meant that families are more vulnerable to predicted rises in interest rates in June and a fall in house prices.
The report concludes that the pattern of Spanish growth is "uncertain".
The Bank recommends that the government tries to moderate demand through monetary policy and makes the economy more flexible towards structural changes.
[Copyright EFE with Expatica]
Subject Spanish news