Spain modifies growth forecast citing high oil prices

Oct 22, 2004 02:00 AM

The Spanish government toned down its forecast of economic growth in 2004 and 2005 as surging oil prices began to hurt the economy.
The government foresees a 2.6-% growth this year and 2.3-% growth for next year, compared with earlier estimates of 2.8 % and 3 % respectively, Spanish Economy and Finance Minister Pedro Solbes said.

The earlier figures were based on an estimated oil price of $ 33 per barrel, Solbes said. He said the economy will take a serious blow if the oil prices continue to stay above $ 50 per barrel.
Spain relies heavily on imported oil with 99 % of its oil needs met by imports. Its oil consumption last year stood at 71.7 mm tons. The country is estimated to pay at least $ 6.5 bn more on oil imports this year due to the soaring oil prices.

Analysts say Spain's GDP growth on average loses half a percentage point for every $ 10 of increase in world oil prices.

Source: Xinhuanet
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