Spain economy grows at fastest rate since 2008

Thursday 29 May 2014 16.22
Spain's GDP grew at a quarterly pace of 0.4% in the first three months of 2014
Spain's GDP grew at a quarterly pace of 0.4% in the first three months of 2014

The Spanish economy grew between January and March, buoyed by recovering domestic demand and marking the third quarter of growth as the country shakes off a long-running recession, data showed today. 

Gross domestic product (GDP) expanded by 0.4% in the first quarter from the fourth, final National Statistics Institute (INE) data showed.

This was the biggest increase since the start of Spain's worst economic downturn in modern times. The figure was in line with initial INE data. 

The economy grew 0.5% on an annual basis, compared to a contraction of 0.2% in the fourth quarter. INE's year-on-year flash estimate was 0.6%.

"The Spanish economy has pulled out of its nosedive and is heading in the right direction," one analyst said, echoing comments made by the International Monetary Fund earlier this week when it said Spain had turned the corner. 

Domestic demand boosted GDP by 0.7 percentage points in the first quarter compared to a negative drag of 0.6 percentage points in the fourth - the first positive contribution in 14 quarters. 

In Spain, domestic demand is worth around two thirds of output and has cramped growth since a devastating 2008 property crash put many out of work, leading to one of the highest unemployment rates amongst developed countries. 

Spanish retail sales rose in April, official data showed yesterday, giving hope of a reversal in trend after three years of mostly falling figures as Spaniards start to spend again. 

Economy Minister Luis de Guindos said earlier this month that the pace of the country's economic growth in the second quarter would be similar or possibly greater than in the first. 

The IMF said on Monday robust exports and better financial market conditions had fed into private consumption and business investment, but warned Spanish people were suffering from the legacy of the crisis with 6 million still out of work.