Search

 

Cablegate: Madrid Weekly Econ/Commercial Update - January 21

VZCZCXRO2620
RR RUEHAG RUEHDF RUEHIK RUEHLZ RUEHROV
DE RUEHMD #0077/01 0281206
ZNR UUUUU ZZH
R 281206Z JAN 08
FM AMEMBASSY MADRID
TO RUEHC/SECSTATE WASHDC 4130
INFO RUCNMEM/EU MEMBER STATES COLLECTIVE
RUEHLA/AMCONSUL BARCELONA 3252

UNCLAS SECTION 01 OF 02 MADRID 000077

SIPDIS

SIPDIS

DEPARTMENT FOR EUR/WE AND EEB/IFD/OMA

E.O. 12958: N/A
TAGS: EAIR ECON EFIN EIND EINV ELAB ENRG ETRD SP
SUBJECT: MADRID WEEKLY ECON/COMMERCIAL UPDATE - JANUARY 21
- JANUARY 25

REF: MADRID 0047

MADRID 00000077 001.2 OF 002


Table of Contents:

ECON/EFIN: Stock market stabilizes after a very volatile week
ECON/ELAB: Unemployment increased to 8.6 percent in 2007 Q4
ECON: Tourism in 2007: More tourists but less money...
ECON/EAIR: ...And low-cost airlines brought 24 million of them
ECON/EIND: Vehicle manufacturing rose by 4 percent
EINV/ETRD: Peruvian President Alan Garcia seeks Spanish
investors
ECON/EAIR: Low-cost travel brings 24 million foreign
travelers to Spain
ENRG/EINV: Chinese firm to invest in solar electricity
projects


STOCK MARKET STABILIZES AFTER A VERY VOLATILE WEEK

1. (U) Spain's Ibex-35 stock index rose by a relatively minor
0.3 percent on Friday to bring the net decline in a very
volatile week to 3.8 percent. The index fell 7.5 percent on
Monday, rose 1.7 percent on Tuesday, fell 4.6 percent on
Wednesday and jumped a one-day record 7 percent on Thursday.
The ups and downs of the Spanish market have been pretty
close to movements in other major European stock markets.
(Comment: The reality is that nobody knows how the markets
will perform in the short-term. It is significant though
that Spanish equities' performance is tracking, for better or
for worse, more consistently with other European stock
markets. This may be a sign that investors expect Spanish
economic performance to be closer to the Eurozone's average
than it has been in years past. Having said that, although
2008 growth rates are being revised downwards for most
countries, Bloomberg and the World Bank are still forecasting
2.8% economic growth for Spain in 2008 vice 2.0% for France,
1.7% for Germany, and a 2.0% average growth rate for the
Eurozone. Even so, lower growth in Spain means less
construction activity and higher unemployment. This helps
explain why economic issues have somewhat unexpectedly become
more prominent in the Spanish election debate.) (Expansion,
1/24/08 and 1/25/08)

UNEMPLOYMENT INCREASED TO 8.6 PERCENT IN 2007 Q4

2. (U) The National Statistics Institute (INE) reported that
the unemployment rate rose to 8.6 percent in the fourth
quarter of 2007, up from 8.05 percent the previous quarter.
In 2007 as a whole, the number of people employed and the
number of unemployed both rose, the latter by 6.5 percent.
Minister of Labor and Social Affairs Jose Luis Caldera noted
on January 24 that the unemployment rate increase was indeed
an unfavorable statistic, but he pointed to the job growth
and a decreasing level of temporary work contracts.
(Comment: This jump in unemployment levels will provide more
ammunition to the opposition Partido Popular in its campaign
for the March 9 general elections. See reftel for more
background.)

TOURISM IN 2007: MORE TOURISTS BUT LESS MONEY...

3. (U) Spain hosted 59.7 million international tourists in
2007, 1 million more than in 2006. The increase is
attributed to the growth of low-cost airline flights to
Spain. Despite this, total spending slipped by 0.7 percent
to 37.2 billion euros, continuing a trend of recent years of
less spending per tourist. Spain is the world's second
leading international tourist destination (second to France
in number of visitors, second to the U.S. in revenues), and
the sector accounts for 12 percent of GDP.

...AND LOW-COST AIRLINES BROUGHT 24 MILLION OF THEM

4. (U) Low-cost airlines brought 24 million passengers to
Spain in 2007, a 34 percent increase over their 2006 total.
The top five such airlines were Ryanair with 5.4 million
passengers, EasyJet with 4.2 million, Air Berlin, Veuling
(Spanish), and Iberia subsidiary Clickair with 1.2 million.
The competition from low-cost airlines has caused some major
airlines like Iberia, Spanair, Lufthansa, and Air France to
cut flights to Spain, and the total number of passengers the
traditional airlines brought to Spain fell by 3 percent.
Low-cost airlines now have 40 percent of the market and are
expected to soon reach 50 percent. Cataluna and the Balearic
Islands were the preferred "low-cost" destination regions,
with a combined 11 million travelers, with Andalucia third.
Most of the passengers were British (8 million) or German
(6.2 million), with significant numbers of Italians (2.3
million) and Dutch (1.5 million) as well. (El Pais)

MADRID 00000077 002.2 OF 002

VEHICLE MANUFACTURING ROSE BY 4 PERCENT

5. (U) Total Spanish motor vehicle production rose 4 percent
in 2007 to 2.89 million units. This was the country's fourth
highest total ever. The Spanish Association of Automobile
and Truck Manufacturers expects an increase of 1 to 2 percent
in 2008. Spain is the world's seventh largest vehicle
manufacturer and the third largest in the EU.

PERUVIAN PRESIDENT ALAN GARCIA SEEKS SPANISH INVESTORS

6. (U) President Garcia's main mission in his January 20-21
visit to Spain was to promote joint business opportunities.
During his first visit to Spain, he met with Spanish
businessmen in hopes of obtaining additional investors from
the energy and industrial sectors. President Zapatero
commended Garcia's economic and investment policies and
offered his support to speed up negotiations between Latin
America and the EU. (all media)

CHINESE FIRM TO INVEST IN SOLAR ELECTRICITY PROJECTS

7. (U) Chinese electrical engineering firm Chint plans to
take stakes in a solar panel producing factory in Murcia and
a number of solar farms. The factory and farms will use Chint
technology. Firms from Germany, Austria, Israel, Britain,
and Japan are also investing in Spain's renewable energy
sector, which benefits from government price guarantees. The
country's installed capacity of solar panels has risen
ten-fold since 2005, and energy regulators estimate that 2
billion euros has been invested in solar projects. While
current solar electricity production remains small, the
installed capacity of solar panels is expected to reach 500
MW by the end of this year and 1,000 MW by 2010, when it will
represent about one percent of the country's total
electricity generating capacity. (Financial Times 01/19/2008)

LLORENS

© Scoop Media

 
 
 
 
 
World Headlines

 

Werewolf: Gordon Campbell On North Korea, Neo-Nazism, And Milo

With a bit of luck the planet won’t be devastated by nuclear war in the next few days. US President Donald Trump will have begun to fixate on some other way to gratify his self-esteem – maybe by invading Venezuela or starting a war with Iran. More>>

Victory Declared: New Stabilisation Funding From NZ As Mosul Is Retaken

New Zealand has congratulated the Iraqi government on the successful liberation of Mosul from ISIS after a long and hard-fought campaign. More>>

Gordon Campbell: On The Current US Moves Against North Korea

If Martians visited early last week, they’d probably be scratching their heads as to why North Korea was being treated as a potential trigger for global conflict... More>>

ALSO:

Gordon Campbell: On The Lessons From Corbyn’s Campaign

Leaving partisan politics aside – and ignoring Jeremy Corbyn’s sensational election campaign for a moment – it has to be said that Britain is now really up shit creek... More>>

ALSO:

Another US Court: Fourth Circuit Rules Muslim Ban Discriminatory

ACLU: Step by step, point by point, the court laid out what has been clear from the start: The president promised to ban Muslims from the United States, and his executive orders are an attempt to do just that. More>>

ALSO: