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MADRID, Dec 5 (Reuters) - Spanish industrial output registered a record fall in October, reinforcing expectations Spain will suffer more than other developed economies as its housing boom collapse coincides with global slowdown.
Production at factories and mines in Spain fell a far higher than expected 12.8 percent year-on-year in October as the euro zone's fourth-largest economy headed towards what economists forecast will be its worst recession in 50 years in 2009.
"This shows we're in for an almighty adjustment in the Spanish economy," said economist Dominic Bryant at BNP Paribas, who estimates Spanish growth will drop over 1.8 percent next year. "I'm not aware that any country has figures as bad as this."
Friday's data from Spain's National Statistics Institute showed double-digit declines in many areas of production, with manufacturing of durable goods like cars and domestic appliances suffering a 20.7 percent fall.
Output of capital goods, such as equipment to outfit offices and plants, fell 13.8 percent, indicating a sharp fall in corporate investment as firms in Spain lay off over 40,000 workers each week to cut costs.
Having long outperformed the euro zone on easy credit, Spain is expected to enter recession by year-end and not emerge until late 2010 as access to foreign financing is choked off, Credit Suisse and UBS forecast this week.
Spanish industry is in no shape to substitute a construction sector that in the last 5 years drove 29 percent of economic growth, directly and indirectly, and created 40 percent of jobs in Spain, economists said.
"This is an opportunity for Spain to change its economic model," said Jose Garcia Zarate at the 4Cast consultancy. (Reporting by Andrew Hay; Editing by Mike Peacock)