Spain economy growing at fastest rate for six years

Growth in Spain’s economy could match the EU average by the end of 2014

Spain’s central bank has this week released an encouraging set of data that shows the country’s economy is growing at its fastest rate for six years.

Official figures reveal a nationwide recovery of momentum, with national output surging by 0.4 per cent in the first quarter of the year, which is more than double that seen at the same stage in 2013…

The country’s painful recession lasted two years, and Spain only officially exited it last year – spurred on by an encouraging export boom that has seen Spain’s automotive industry grow to become the second-largest in Europe, behind Germany.

The data released by Spain’s central bank shows that the recovery is much more balanced than previously thought, however, with consumer confidence returning to help drive domestic demand, and unemployment beginning the slow drip-drip down towards more manageable levels. As a result, it was the first year-on-year rise in gross domestic product (GDP) for more than two years.

“Spanish economic activity continued on a path of gradual recovery in a setting marked by further progress in the normalisation of financial markets and gradual firming of the improvement in the labour market,” said the central bank statement.

Future predictions forecast total GDP growth of 1.2 per cent this year, which would put Spain on par with much of Europe, and up to 1.7 per cent next year. By then, current Prime Minister Mariano Rajoy will be readying his party for the 2015 general elections, so a brighter economic outlook between now and next May could do wonders for his electoral campaign.

In banking, Spain’s leading lending institutions have also been able to drive down their bad loan ratios, with Caixabank and Banco Sabadell reporting a positive outlook for the first time since 2008.

In Spain’s real estate sector, despite combined sales volumes amounting to almost 70 per cent less than in 2006 (when €158 billion in housing values changed hands), there was encouraging news, too, with total sales volumes reaching €38 billion. Property sales in Andalucía led the way, accounting for nearly €7 billion of that total volume, followed by Catalonia on €6.7 billion and the Madrid region on €6.5 billion. In total, figures from the Spanish Ministry of Development reveal that there were 285,136 private housing transactions in 2013, which is a slight 12 per cent decrease on 2012.

However, foreign investment in Spanish real estate is now at a nine-year high, with British nationals snapping up 15.1 per cent of the €6.45 billion-worth of all homes sold to foreigners in Spain last year.