Fourth quarter data reveals a stronger Spanish economy

Packed beaches, busy factories, happy banks… 2016 was a good year for the Spanish economy.

The upturn in Spain’s economic fortunes may appear relatively slow and steady when viewed up close, but the benefit of hindsight may indeed show that the nation’s impressive turnaround in fortunes since 2014 was, in fact, something special…

Today, the nation still suffers from high unemployment and low wage growth, but if you had offered 2016’s economic data to any financial analyst, bank manager, businessman or – yep – average man or woman on the street in 2010, they would have bitten your hand off.

After enjoying gross domestic product (GDP) growth of 3.2% for the past two years straight, Spain is not only mostly recovered from the effects of the recent double-dip recession, but appears to be traversing a course towards becoming one of the EU’s shining economic stars.

New data published this week by the National Statistics Institute (INE) reveal that in the fourth quarter of 2016, the economy grew a further 0.7% on last year, fuelled by excellent growth in exports, tourism and industry.

This end-of-year performance continued a trend of 24 months of sustained economic growth that has placed Spain among the top three performing economies in the Eurozone – a far cry from the dark days of 2008-2013, when unemployment rates spiralled out of control, thousands of youth left, and talk of a recovery was treated with an unhealthy dose of scepticism.

How things have changed. Unemployment rates remain high, at above 16%, but the labour reforms introduced by Prime Minister Mariano Rajoy have helped to make the job market more attractive for employers, while economic recovery elsewhere in Europe has also filtered through to Spain, most notably in the impact foreign money and spending has had on Spain’s tourism and real estate sectors.

Looking ahead, economists in Madrid expect growth to be around 2.5 to 2.7% this year, which while a contraction on previous growth, still represents a solidity that the nation could have only dreamed of even four years ago.

Monthly job creation grew by an average of 74,080 every month in 2016, and Spain can expect more of the same this year. Well, almost.

“Quarterly growth at the very least will be similar to what we had in the second half last year.” Said Spanish economy minister Luis de Guindos. And when one considers that Spain was able to achieve this growth in 2016 while wrestling for most of the year with political uncertainty, economists’ cautious projections right now could prove to be rather conservative… again, in hindsight. Either way, Spain has begun 2017 in the healthiest shape it has known for more than a decade.