Spanish economy slowing fast

A leading Spansh newspaper, ABC, reported today that Spanish growth is decelerating quickly. According to the paper, year-on-year growth slowed from 3.5% to 2.7% while quarter-on-quarter, growth was only 0.3% versus 0.8% in the previous quarter.

The article goes on to say that construction spending has been hampering both growth and employment as housing has been at the center of the economic slowdown. I am watching the Spanish economy and housing market closely because it more closely mirrors the overbuilding and price appreciation of the U.S. market than does the UK, where overbuilding has been much less severe.

Hopefully, this means a quick deceleration in prices and the economy followed by a quicker return to health. However, the financial sector credit losses may diminish the economy’s ability to sustain a vigorous recovery after the speculative excesses have been purged.

Any Spanish readers out there?

La desaceleración en consumo e inversión hacen caer el crecimiento al 2,7%, ABC, 21 May 2008

See also: Other posts under the label ‘Spain.’

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