Spain Business Brief - Friday February 13 2009

Spain Business Brief - Friday February 13 2009
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By h.b. - Feb 13, 2009 - 1:15 PM
Inflation falls to 0.8 percent

EFE

Inflation in Spain has fallen dramatically to levels not seen for four decades. The latest data for January puts inflation at 0,8%, down 1.2% over the month, with the cheaper prices of petrol, the January sales and some cheaper foodstuffs such as fish and milk leading the way.
There are real concerns now that the country will enter into deflation as the underlying inflation rate falls to 2%.
Clothing and footwear are already officially cheaper because of the sales.
The numbers were published by the INE National Statistics Institute. It’s the sixth consecutive month that inflation has fallen in Spain,

Meanwhile the economy in the Eurozone shrunk by 1.5% in the last quarter of last year according to the latest data. Growth over the year in the EU ended at 0.9% where as in the Eurozone it was 0.7%. The figures come the day after it was announced that Spain has officially entered into recession and indicate that Europe as a whole can also be considered to be in recession.

Iberdrola Renovables is forecasting a profit this year of 520 million, compared to 390 million last, a growth of some 30%. The company says it is to invest 2 billion € this year as rapid growth continues in the renewable energy sector. President of the company, Ignacio Sánchez Galán said that by the end of the year the group will have installed 4,000 MW in two years, but future growth was dependent on new regulations in the United States.

The Spanish Chambers of Commerce are calling on the state to enter into the capital of the banks in Spain as a way of increasing much needed credit to businesses. President Javier Gómez-Navarro said state money should be given to banks and savings banks as soon as possible.

The BBVA bank is to renegotiate the terms of credits worth 6.565 billion € with clients who are now in difficulties. The bank wants to reduce bad debt levels by making the new terms and has announced that it will cut 7.5 billion in loans to constructors.

As people find it more difficult to obtain a mortgage in the current climate, more Spaniards are deciding to rent. The number of properties in the rental sector is forecast to be up 15.5% this year compared to 2007, to reach 2.2million. Aguirre Newman also forecasts that the number of houses sold will fall this year by 31%.

The Competition Commission in Spain has approved the conditions of the offer from Gas Natural for power company Fenosa. However there are some tough restrictions. The company has to lose 6,000 private gas clients, abandon the board of Cepsa, and sell its 5% holding in Enagás.

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