occhio all'inflazione negativa.....notizie dalla Spagna....
Spain crisis builds as disinflation harkens
First in euro zone to see negative price growth
By
Barbara Kollmeyer, MarketWatch
Last update: 7:04 a.m. EDT March 30, 2009
MADRID (MarketWatch) -- The economic crisis in Spain took a new turn on Monday after the country became the first in the euro zone to report a negative price change on the heels of a weekend takeover of a Spanish savings bank by the government.
Preliminary data showed that harmonized consumer prices fell 0.1% in March on an annual basis, against a 0.7% rise in February, according to the Instituto Nacional de Estatdistica. It was the first decline in consumer prices since the INE started tracking figures in 1961.
Analysts were expecting a rise in prices of around 0.4%. Inflation has been decelerating across the euro zone since peaking last summer.
There were no details given in the report or a breakdown, but Eoin O'Callaghan, analyst at BNP Paribas, said the very weak data is probably due to three factors: last year's early Easter dropping out of the annual comparison; more favorable food and energy base effects; and "given the pace at which the Spanish economy is deteriorating," a further dramatic fall in core prices in response to weak demand.
"We have seen a dramatic moderation in underlying inflation in other countries (e.g. Ireland), which are similarly both experiencing a massive growth shock and need to regain competitiveness after a decade long domestic demand boom," said O'Callaghan in a research note on Monday.
O'Callaghan said given the disinflation figure from Spain, there will likely be a "downward surprise" to eurozone inflation data on Tuesday. Consensus for the data is a 0.7% annual rise, while BNP Paribas has been forecasting 0.6%, but said there's now a small risk of a rise of just 0.5%.
Indeed, the economic picture in Spain is bleak, with the economy reeling from the effects of not only a global recession, but the complete collapse of its housing market, a nearly sole driver of the economy in the past few years. The country has the worst unemployment in the euro zone, reaching 14.8% in January, with only Latvia coming close with a 12.3% rate in the month.
"We don't know about the medium term evolution of interest rates, among other things, because Spain has no control over them. An unemployment rate that might surpass 20% some time next year and a close to 3% contraction in GDP in 2009 leads us to believe deflation is a possibility and interest rates could remain low for awhile," said analysts at Credit Suisse in a research note on Monday.
Interest rates in the euro zone are set by the European Central Bank, which meets Thursday, with many expecting a cut in the key lending rate to 1% from 1.5%.
Credit Suisse analysts added that they believe the correction in housing prices in Spain --down 9% annual in February vs. 10.8% in January -- is just beginning, and prices are still high with some banks now offering 100% financing to an individual to purchase a house if developers cut prices by 20%. "This is, in our view, a big problem. A 20% (or 30%) discount does not mean anything if the properties are overvalued by let's say 50%," Credit Suisse analysts said.
To boot, they added that the average Spanish family now needs 7.2 years of combined salary to buy a house (more than 9 years in Madrid), versus the subprime threshold of 4 to 5 years in many countries and 3 years in the U.S.
Meanwhile, Spanish banks traded lower on Monday in response to a government takeover of a troubled savings bank, the first in the current financial crisis. The chief executive officer and the entire board of the savings bank, Caja de Ahorros de Castilla-La Mancha, were relieved of duty and replaced on Sunday with three administrators appointed by the Bank of Spain.
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The country's central bank said it will provide funds to help the bank backed up by 9 billion euros ($11.8 billion) in government guarantees.
Spain's IBEX 35 (
XX:IBEX:
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