Spanish economy 'at its best for 29 years'

José Luis Rodríguez Zapatero, the Spanish Prime Minister, announced last week, in the trading hall of Madrid's stock exchange, that the Spanish economy grew by 3.9% in 2006, and that last year was the best economic year in the 29 years of Spanish democracy. Spain is now the eighth largest economy in the world, with a gross domestic product (GDP) in excess of €1,000bn, he added.

The Spanish PM said there were signs that the economy was becoming less reliant on construction as the motor for growth, and that more than 2m jobs had been created since he took office in 2004 – about 40 per cent of the European Union total – while a large influx of immigrants had kept a lid on wage inflation. Unemployment, at 8.5%, was at its lowest level since 1979.

Mr Zapatero forecast that the economy will grow by more than 3.5% again this year. He said his government was committed to making the economy more efficient and productive, by investing in infrastructure and education and cutting red tape.

However, Mr Zapatero suggested no remedies for Spain’s enormous current account deficit, which thanks to high oil prices, consumer spending and a rise in corporate borrowing, is now the second biggest in absolute terms after the US. The deficit totalled €8.62bn in January 2007, the Bank of Spain reported, up 37% on a year ago.

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