Spain Business Brief - Monday March 31 2008
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By h.b. - Mar 31, 2008 - 9:18 AM
Record inflation in Spain for the advance figure for harmonised inflation in March

The increase in oil prices is being blamed for a new increase in the harmonized inflation index in Spain. The advance figure for the year to March from the National Statistics Institute has come in at 4.6% the highest ever seen for the index since it was started to be published in 1997. The harmonised index is the one which compares inflation rates across the European Union.
Reuters report that the increase was not expected with most analysts expecting the index to have remained at 4.4%

The Spanish Economy will increase by only 1.8% this year, according to new official reports. It compares to the current growth rate of 3%.
El Mundo newspaper claims today that the Prime Minister has seen an internal report showing the slow down in the economy this year will be unexpectedly intense.
The indications are that the last quarter of the year could see the largest fall in growth seen in a three month period in Spain since the Olympic Games in 1992, and unemployment is likely to increase to back over 10% by 2009.
The changing economic circumstances will lead the Prime Minister, José Luis Rodríguez Zapatero, to speak about the economy and the Government’s plans during his investiture speech.

Meanwhile the number of real estate companies and builders who have filed for bankruptcy protection in Spain is increasing. The mixture of fewer real estate sales and the banks closing the taps on easy mortgages have combined to complicate the landscape. The first large company to admit problems was Llanera last October, and others such as Habitat, Martinsa-Fadesa or Detinsa have had to refinance their debts. Valencia builder Encoval presented its problems last Friday at a time where the company is building 950 new homes.

Latest figures indicate that more than 60% of the credits awarded by banks and savings banks in Spain are linked to construction and real estate, with the bad debts in such companies increasing by 130% over last year.

Despite all this bad news the 35 companies listed in the Ibex – the main index in Madrid are showing record profits in absolute terms. The average profit increase was 14% last year, reaching 25% in the textile firm Inditex.

Spain is expected to employ 1,500 immigrants in the fishing industry over the next two years. A new training program under the name of Forpex is designed to strengthen the Spanish fishing fleet. The scheme has the support of the Ministries for Foreign Affairs, Employment and Social Affairs, as well as for Agriculture and Fisheries.

A new study from the IESE business school and Navarra university has shown that 95% of pension funds are less profitable that ten year state bonds. The study showed growth in 2007 for the state bonds of 5.76% compared to just 3% for individual pension plans.

The price of a gas bombona in Spain, the bottled butane gas used in many parts of the country, is to increase 9% tomorrow, April 1. It will take the price to 14.1 € compared to the current price of 12.94 €.

And finally,
Good news for the Spanish wine industry with a record for exports both by volume and value last year. The 15 million hectolitre barrier was broken with a 6.6% increase over the year to reach a value of 1.833 billion € - up 12.4%.

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