Spanish recovery gathers pace as GDP growth expands to 0.3%

Spanish growth accelerated in the last quarter, underscoring prime minister Mariano Rajoy’s assessment that the euro region’s fourth-largest economy has overcome a slump triggered by the end of real-estate boom.

The Madrid-based National Statistics Institute (INE)today said gross domestic product expanded 0.3 per cent in the quarter ending December 31st from the previous three months, increasing for a second straight quarter for the first time since 2011.

The figure, which matches the Bank of Spain’s recent estimate, follows growth of 0.1 per cent in the third quarter.

Even so, GDP shrank 1.2 per cent over the full year, after shedding 1.6 per cent in 2012, INE said.

Mr Rajoy is counting on household spending and investment to pick up in 2014 after record exports helped mitigate the impact of the deepest budget cuts in Spain’s democratic history last year.

His government predicts an expansion of around 1 percent this year will help stabilize a debt load that has more than doubled since 2008.

“Spain’s steadily improving growth profile puts it on a strong footing going into the new year,” said Timo del Carpio, an economist at RBC Capital Markets in London. “The pace of activity picked up noticeably over the second half of last year, and more recent survey evidence suggests the new-found momentum will carry over.”

The Bank of Spain last week estimated that household spending grew 0.4 per cent on the quarter in the three months through December, the same as in the third quarter. Investment accelerated to 1.1 per cent, it said.

Bloomberg