Spain’s two-year recession over, says central bank

With the recession likely over, how long until Spain starts creating more jobs?

Spain has emerged from its two year-long recession said the Bank of Spain this week, as gross domestic product (GDP) grew by 0.1 per cent between July and September this year.

Although modest by any standards, the growth represented the first time in two years that GDP was in the black rather than the red. These figures are estimates by the Bank of Spain, with official data from the Office of National Statistics (INE) not due to be published until next week…

For now, though, the country’s leading fiscal institute is buoyed by the apparent good news. Few of the millions of unemployed Spaniards are likely to share such confidence, but a slight recovery is better than further contraction, which is something Spain has had to get used to ever since the economic crash of 2008.

A monthly bulletin from the central bank said that the recovery in activity in the third quarter of the year was due to “a more favourable contribution from the external sector,” hinting at Spain’s strong export industry and growing investor confidence on the international market, with a certain Bill Gates among the entrepreneurs ploughing money into Spanish businesses.

An economist at Arcano, one of Spain’s leading financial advice firms, has even gone so far as to say that the “recently implemented reforms have made Spain an export powerhouse.”

“Spain will fully leave the recession behind in 2014,” added Ignacio del Torre, “with private investment and consumption growth turning positive after three years of decline and credit levels stabilising.”

Spain’s efforts to reform its economy were praised elsewhere. “The country has made big structural changes, it’s been engaged in a lot of deficit reduction, business sentiment is improving and unemployment is probably close to a peak,” Robert Wood, economist for Berenberg Bank, told Bloomberg.

However, despite unemployment unlikely to rise further, the International Monetary Fund recently predicted that it will remain close to 25 per cent until 2018.

There have been various false dawns and plenty of encouraging headlines recently, but until the country can start generating secure, well-paid employment, its populace is likely to remain disillusioned with the current reforms and trends towards a more diverse, restructured economy.

Hope is on the horizon, however: both Bloomberg’s collection of international economists, and Spain’s own Budget Minister, Cristobal Montoro, have stated that unemployment is likely to fall slightly between now and the end of the year, with more jobs created in early 2014.