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Oil Report

INTERVIEW-Spain targets Asia business as economy stalls

MADRID, May 3 (Reuters) - Spain is trying to push its powerful infrastructure firms into Asia, a region it has long neglected, to counter a steep economic slowdown at home, a senior trade official said on Saturday.

As Spain hosts the Asian Development Bank's annual meeting in Madrid, it is showcasing world-leading renewable energy, construction and transport firms such as Gamesa GAM.MC, Acciona ANA.MC and Ferrovial FER.MC.

Such firms are keen to diversify abroad as the Spanish economy heads into its worst slowdown in 15 years.

A strong European single currency -- which hit a record $1.6019 versus the dollar in April -- is hurting Spanish exports but proving an incentive to firms looking to move into Asia, said Angel Acebes, head of Spain’s foreign trade agency.

“A stronger euro means Spanish investment abroad is more attractive and companies are looking at globalizing,” Acebes said in an interview.

CHALLENGING TIMES

Spain has averaged 3.8 percent economic growth over the past decade but needs to cut dependence on house building, consumer demand and credit to keep outperforming euro zone rivals.

Most economists see Spanish growth halving to around 2 percent in 2008 as tighter credit conditions paralyze property demand and household spending.

Supporting the economy is a corporate sector that counts six of the world’s 10 largest infrastructure firms.

Companies like Iberdrola IBR.MC and Abengoa Solar ABG.MC have made Spain the world's second largest wind power producer and among the top five solar power generators.

Spain boosted exports nearly seven percent last year. Exports to China rose 30 percent and those to Asia represented 6.25 percent of Spain’s 2007 total.

Madrid has targeted China, India and Japan as growth markets, but may struggle to repeat 2007 trade performance given euro strength and slowing global growth, Acebes said.

“Spanish firms face a challenge,” he said.

Reporting by Andrew Hay; Editing by Nick Edwards

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