REUTERS MADRID
SPAIN'S economy is going through an exceptionally complex economic crisis, Economy Minister Pedro Solbes said yesterday in an abrupt shift in tone.
For me, this is ... the most complex crisis we've ever seen due to the number of factors at play, he said in an interview on PuntoRadio.
Up to now the veteran minister has avoided calling the rapid slowdown an economic crisis.
The Spanish government has been criticised for failing to recognise the intensity of the economy's swing from 3.8 percent growth in 2007 to an expected standstill in the second quarter.
There is a sizeable slowdown on the way, and if anything the situation has deteriorated over the last few days, said Daniel Antonucci, economist at Merrill Lynch.
The government is doing the right thing with its fiscal rescue package, but it's unlikely to have a significant effect considering the current situation.
The Spanish government is spending some 10 billion euros in 2008 and a further 8 billion euros in 2009 on a variety of fiscal stimulus programmes.
Solbes said international financial difficulties, high oil prices and modest growth in the United States and Germany were exacerbating Spain's economic woes.
On the domestic front he blamed the construction sector slowdown and an abrupt fall in consumer spending, both key drivers of Spain's decade-long economic boom. The outlook has been further clouded by the failure of Spain's largest real estate and construction company Martinsa Fadesa on Monday as it collapsed under the weight of its huge debt pile and filed for administration.
Solbes said the company's woes were an isolated case and the government would not bail it out. It is true that other countries have acted to help companies, but it's normally when the problems are systemic and could filter through to other sectors ... but this has nothing to do with the Spanish case, he said.
He reiterated the government's belief that a turnaround will come in the second half of 2009 with growth of around 2 percent this year.