Spain will not follow ailing neighbor Portugal in seeking a European bailout, Spanish Economy Minister Elena Salgado said yesterday, hoping Lisbon’s move will draw a line under the Europe’s debt crisis.
Portuguese Caretaker Prime Minister Jose Socrates announced on Wednesday that Portugal was asking for financing from the EU, the third euro zone member to do so after Greece and Ireland last year. He argued that the economic risks had now become too great to go it alone after borrowing rates soared.
The much-anticipated bailout could turn market attention back to Spain and its weak public finances, ahead of a three-year Treasury auction later this year.
Photo: R euters
“[The risk of contagion] is absolutely ruled out ... it has been some time since the markets have known that our economy is much more competitive,” Salgado told national radio station SER.
Spain on Wednesday cut its forecasts for growth for the next two years on the likely impact of higher interest rates and oil prices, ahead of an expected European Central Bank (ECB) rate hike yesterday.
A quarter point move by the ECB would not endanger Spain’s economy, which is already dealing with harsh public spending cutbacks and labor market reforms, Saldago said.
“The impact of a small rise in rates is very slow. Mortgages [in Spain] are only revised once a year and so the transmission [of a rate rise] is not immediate,” she said.
Spain exited an 18-month recession at the start of last year but growth has stuttered since then. Economists and the central bank doubt the economy can grow as much as the government expects.
The government sees the economy expanding by 2.3 percent next year and 2.4 percent in 2013, trimming earlier forecasts for growth of 2.5 percent and 2.7 percent respectively.
For this year, the government kept its forecast for growth at 1.3 percent.
“Internal demand is not growing, but external demand is growing more than expected so we can keep our growth forecast,” Salgado told a news conference.
The unemployment rate, -already the highest among industrialized countries, will hit 19.8 percent this year.
The rate will ease to 18.5 percent next year, 17.3 percent in 2013 and 16 percent in 2014, but the figures are all higher than previously forecast by the government.
Spain’s unemployment rate stood at 20.33 percent at the end of last year, the highest level in the Organisation for Economic Cooperation and Development (OECD).
BUSINESS UPDATE: The iPhone assembler said operations outlook is expected to show quarter-on-quarter and year-on-year growth for the second quarter Hon Hai Precision Industry Co (鴻海精密) yesterday reported strong growth in sales last month, potentially raising expectations for iPhone sales while artificial intelligence (AI)-related business booms. The company, which assembles the majority of Apple Inc’s smartphones, reported a 19.03 percent rise in monthly sales to NT$510.9 billion (US$15.78 billion), from NT$429.22 billion in the same period last year. On a monthly basis, sales rose 14.16 percent, it said. The company in a statement said that last month’s revenue was a record-breaking April performance. Hon Hai, known also as Foxconn Technology Group (富士康科技集團), assembles most iPhones, but the company is diversifying its business to
Apple Inc has been developing a homegrown chip to run artificial intelligence (AI) tools in data centers, although it is unclear if the semiconductor would ever be deployed, the Wall Street Journal reported on Monday. The effort would build on Apple’s previous efforts to make in-house chips, which run in its iPhones, Macs and other devices, according to the Journal, which cited unidentified people familiar with the matter. The server project is code-named ACDC (Apple Chips in Data Center) within the company, aiming to utilize Apple’s expertise in chip design for the company’s server infrastructure, the newspaper said. While this initiative has been
GlobalWafers Co (環球晶圓), the world’s No. 3 silicon wafer supplier, yesterday said that revenue would rise moderately in the second half of this year, driven primarily by robust demand for advanced wafers used in high-bandwidth memory (HBM) chips, a key component of artificial intelligence (AI) technology. “The first quarter is the lowest point of this cycle. The second half will be better than the first for the whole semiconductor industry and for GlobalWafers,” chairwoman Doris Hsu (徐秀蘭) said during an online investors’ conference. “HBM would definitely be the key growth driver in the second half,” Hsu said. “That is our big hope
The consumer price index (CPI) last month eased to 1.95 percent, below the central bank’s 2 percent target, as food and entertainment cost increases decelerated, helped by stable egg prices, the Directorate-General of Budget, Accounting and Statistics (DGBAS) said yesterday. The slowdown bucked predictions by policymakers and academics that inflationary pressures would build up following double-digit electricity rate hikes on April 1. “The latest CPI data came after the cost of eating out and rent grew moderately amid mixed international raw material prices,” DGBAS official Tsao Chih-hung (曹志弘) told a news conference in Taipei. The central bank in March raised interest rates by