Spain payments deficit halves over nine months

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The industry ministry’s current account deficit was down 49.9 percent from the year-ago period.

Madrid – Spain's current account deficit halved during the first nine months of the year when compared to the same time last year as imports plunged in the midst of a steep recession, the government said Tuesday.

It reached EUR 37.3 billion at the end of September, down 49.9 percent from the year-ago period as imports dropped 30 percent while exports fell 19.8 percent, the industry ministry said.

Spain's exports to the rest of the European Union fell by 20 percent during the period while its sales to nations outside of the bloc dropped by 25 percent, it added in a statement. The EU absorbs 70 percent of Spain's exports.

The country's current account deficit had ballooned in recent years to become the world's largest in absolute terms in 2008.

But it has been shrinking since the Spanish economy, the fifth-largest in Europe, entered its worst recession in decades in the second half of 2008 as the global credit crunch worsened a correction already underway in its key property sector.

On Monday European Central Bank President Jean-Claude Trichet urged Spain and other eurozone nations with wide current account imbalances to limit wage increases are moderate in order to bring their payments deficit under control.

"There is a need for moderation in wage claims to regain competitiveness," he told a business conference in Madrid.

"This window of opportunity cannot be missed in those countries where substantial increases of production costs have been one of the causes for widening imbalances in current accounts, and Spain is one of them."

The Spanish economy contracted 0.3 percent in the third quarter, its fifth straight quarterly decline, contrasting with a return to growth in the entire eurozone of 0.4 percent during the same period.

AFP / Expatica

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