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MADRID, Oct 31 (Reuters) - Spain's current account deficit fell in August thanks to a higher surplus in tourism and a lower trade deficit as both imports and exports fell in the slowing economy, the Bank of Spain said on Friday.
The deficit in the current account, which is the broadest measure of Spain's commerce with the world, came in at 6.93 billion euros ($9.05 billion) in August, down from deficits of 7.38 billion euros in July and 7.51 billion euros in August 2007, the bank said in a news release.
Spain had the second-highest current account deficit in the world in nominal terms in 2007, trailing only the United States, as a construction and consumption-fuelled boom hit its highest point before petering out this year.
"The lower current account deficit (in August) is good news in itself, but there's still a long way to go and we shouldn't forget that this correction, to a certain extent, is due to the economy's recessive tendency," said Xavier Segura, from Caixa de Catalunya.
Spain's deficit in goods traded fell slightly compared to August 2007 to 7.02 billion euros. Both exports and imports fell as both the Spanish and world economies slowed, but exports retreated more slowly at a 0.3 percent rate from a year ago while imports lost 0.5 percent.
Tourism income rose slightly while spending by Spanish tourists abroad fell, which cut the overall deficit.
In the first eight months of the year, the current account deficit rose to 72.96 billion euros, up from 68.54 billion euros in the same period of 2007.
Spain's current account deficit, which is equivalent to roughly 10 percent of gross domestic product, means that the country is consuming more foreign goods and services than it is selling abroad and thus accumulating considerable amounts of debt.
The country is now set to pay a painful price for this imbalance, with some economists forecasting a protracted slowdown as the relatively uncompetitive economy is forced to save more. Spain's membership of the euro means it cannot regain competitiveness relative to many of its European trading partners by devaluing its currency. (Reporting by Jason Webb and Manuel Maria Ruiz, editing by Andy Bruce)