The pain in Spain

"Spain's long property boom has come to a painful endThe Spanish economy has been a driving force for economic activity in the euro area for more than a decade, with year-on-year GDP growth exceeding the average rate of expansion in the euro area in every quarter since 1995. The good times are now over. Turmoil in the world's financial markets has coincided with the bursting of Spain's decade-long housing bubble, raising fears of a deeper and more abrupt economic slowdown than previously thought. The weakness began last year in the housing market?the major driver of the Spanish economy over the last ten years?with a decline in residential building permits of 11% in 2007 (in the fourth quarter alone the number of permits slumped by a disturbing 29% year on year). And the danger signs are now spreading to other sectors of the economy. Price-adjusted retail sales contracted by around 2% year on year in each of the three months to February 2008, while consumer confidence fell back to its lowest level for more than a decade in the first quarter. The manufacturing sector is also taking a hit. According to Eurostat data, year-on-year growth in manufacturing orders has slowed down markedly since the start of 2008, with the European Commission's business confidence survey revealing that sentiment in the services industry in March had fallen to its weakest level since the inception of the survey in 1996 (admittedly a good period for the Spanish economy). ..." (2008-4-22)

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