Bank chief warns of weaknesses in economy

29 June 2004

MADRID — The governor of the Bank of Spain appealed Tuesday to Spanish business to develop an “innovative spirit” to compete internationally.

Jaime Caruana, speaking at a conference organised by the The Economist magazine, said despite the rise of the Spanish economy there were “elements of vulnerability”.

If these were not dealt with, then they might harm Spain’s ability to compete on the international market in the future and the capacity to advance in the European Union.

Caruana referred to the relatively low level of investment in infrastructure, which he said could damage productivity.

But he did show relative optimism about this situation for the near future.

He said there must be more stimulus for innovation within the economy.

Caruana said the difference between inflation and labour costs would harm Spain’s ability to compete with other countries in the Euro-zone.

Countries like China and those of  Eastern Europe could not only offer cheaper labour but also an increasingly better trained workforce and more modern production facilities.

Meanwhile, the level of inflation rose to 3.5 in June, up 0.1 percent on May, according to figures released by the National Institute for Statistics.

[Copyright EFE with Expatica]

Subject: Spanish news