MADRID: Spain’s central bank said that Spanish economy is on the move and it may grow 0.8% in the first quarter of 2015 as compares with last year’s same period. The eurozone’s fourth-largest economy is likely to grow 2.5 per cent on an annual basis in the first quarter.
The bank also raised its forecast for economic growth this year to 2.8 per cent from 2 per cent previously. In 2016, the central bank said it expects the economy to grow 2.7 per cent. Spain’s economy grew 1.4 per cent in 2014, the first year it has expanded since the country’s real-estate market collapsed in 2008.
Among the reasons for Spain’s unexpectedly strong economic takeoff, the Bank of Spain cited solid international demand for Spanish products amid a weaker euro and a continued slide in borrowing costs for Spain’s companies, as well as developments that are largely the result of monetary policy easing by the European Central Bank.
These factors may contribute to keeping Spain in deflationary conditions over the coming months, but the central bank said underlying inflation trends are turning positive in response to stronger consumer demand. This means that, in the absence of further energy price decreases, Spain’s consumer-price index may turn positive again soon.
This should have a slightly negative effect on domestic demand, the central bank said, noting that private consumption should rise 3.3 per cent this year and slow to 2.4 per cent next year as price increases lead to less spending.
