Spain’s economy is still growing, but at a slower pace, and it could reflect in the country’s exchange traded fund (ETF).

Ben Sills for Bloomberg reports that the Spanish economy grew only 0.3% in the first quarter, the slowest since the third quarter of 2000, and less than half of the 0.8% seen the quarter before. So what’s going on?

Home sales (or lack thereof) are a big culprit, as they fell by 25% in the year to February as mortgage costs rose, banks tightened credit for potential buyers and unemployment took over. Sound familiar?  Economists say there is a 50% chance the Spanish economy will slip into a recession.

Spanish building companies are slumped, some by as much as 83%, and the real estate slowdown is likely to be worse than anticipated. The economic conditions because of housing in Spain is similar to that in the United States. In fact, our own domestic crisis appears to be taking its toll worldwide.

iShares MSCI Spain Index (EWP) has 38.3% of assets spread across financial services. Year-to-date, the fund is up 2.3%. Can it hang on in spite of our woes here?

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For full disclosure, Tom Lydon’s clients own shares of EWP.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.