MADRID: Spain has created more than 430,000 jobs over the course of 2014 and returned to growth after six-year slum, official data showed at the end of January.
The Spanish economy, the eurozone’s fourth-largest, expanded by 1.4 per cent last year after contracting by 1.2 per cent in 2013, according to the National Statistics Office. It is the first time there has been full-year economic growth in Spain since 2008 when a property bubble collapsed, sending millions of people out of work and pushing the country to the brink of a bail out. Falling borrowing costs, a depreciating euro and strong exports have helped drive the turnaround. Lower oil prices are now providing a stimulus worth 1.5 per cent of gross domestic product, boding well for growth in 2015, an election year.
Growth accelerated in the fourth quarter to 0.7 per cent from 0.5 per cent in the third quarter as consumer spending picked up. Retail sales over the Christmas period grew at the fastest rate in just over 10 years. These figures are in line with the government lead by Mariano Rajoy estimate for 2014. Spanish Economy Minister Luis de Guindos has already said that the economy is likely to grow by more than 2.5 percent this year, above official forecasts of 2 per cent, and he foresees some 15 billion euros in energy savings this year.
The figures confirmed that Spain was one of the fastest growing eurozone economies last year, behind Ireland which is estimated to have grown by 4.7 per cent and Germany which grew by 1.5 per cent. The latest quarterly labour market survey also showed a notable increase in the workforce, suggesting that unemployed Spanish who gave up hope of finding work during the crisis are looking for jobs once again. This increase meant the overall unemployment rate rose slightly compared to the third quarter, to 23.7 per cent. The jobless rate slid to 23.7 per cent in 2014, down from 25.7 per cent in the previous year. The unemployment rate for those under the age of 25 stood at 51.8 per cent. While companies have started to create jobs again, analysts point out that the majority are low-wage, short-term contracts.
In early February, Brussels raised its forecast for Spanish economic growth in 2015 to 2.3 per cent, a significant increase from its previous prediction. After reducing Spanish growth prospects from 2.1 per cent to 1.7 per cent three months ago, the European Commission is now optimistic enough to have applied the biggest upward revision in the entire eurozone to Spain. Brussels also feels that Spain will miss its deficit target of 4.2 per cent of GDP by three tenths of a point in 2015. tax reform promised by the Mariano Rajoy administration, and the fact that 2015 is an election year, which means the government will be loath to make any spending cuts that might anger voters.
