Economy / Spain
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The Housing Hangover Kicks In
August 2008 | Economic AnalysisSorry, you must be a subscriber to view this article in full. If you are a subscriber please login.
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BMI View: The Spanish housing hangover is kicking in, and it looks nasty. The construction sector - for so long the darling of economic growth - is in a state of paralysis, and with house prices undergoing a painful correction, the worst is yet to come. As capital investment and disposable incomes dry up due to sinking morale, rampant inflation and rising unemployment, other areas of the economy are unlikely to remain unscathed. We are becoming increasingly convinced that economic growth will come down with a bang this year and next, to 1.4% and 0.5% respectively (from 3.8% in 2007). As such, a technical recession could be on the cards, but full-year growth should just about keep its head above water.