MADRID: Spain’s economy picked up steam in the first three months of the year thanks in part to strong exports, underscoring expectations that growth will be rosier than initially forecast this year as prospects across the eurozone also brighten.
Gross domestic product grew 0.8% on a quarterly basis between January and March, up from 0.7% in the previous quarter and in line with estimates, the National Statistics Institute confirmed in a final reading on Thursday, Reuters reported. The economy expanded by 3% on an annual basis.
Exports by companies emerging from a prolonged downturn in Spain helped lift the economy out of recession in mid-2013, and these have remained buoyant since, supporting the recovery alongside a resurgence in household spending.
Economsts had expected the pace of the rebound to fade in 2017, with consumer budgets hobbled by stronger inflation and as the knock-on effects of Britain’s looming European Union exit started to trickle through.
But Spain’s economic growth has defied expectations even as other potential headwinds lurked, including rising oil prices in a country heavily reliant on energy imports. Domestic demand held up in the first quarter as a turnaround in the job market maintained a stronger pace than many analysts had predicted, though household spending grew at a its slowest quarterly pace in just over two years.
GDP generated by exports expanded by 4% from the previous three months, up from 2% a quarter earlier.
Growth across Europe has also picked up, propelled in part by years of central bank largesse. Business morale in the region’s economic motor, Germany, is improving thanks to renewed optimism about the political outlook in the bloc after pro-EU candidate. Spain’s economy, the fourth largest in the eurozone and one of the fastest growing, may now expand at an even quicker pace in the second quarter, the government has said.
It has already hiked the annual growth forecast to 2.7% from 2.5% at the end of April, and the next few months will coincide with the summer tourism season, which tends to boost job creation. Analysts believe Spain’s GDP will reach pre-crisis levels during the April to May period, matching levels not seen since 2008, the year a property boom came crashing down.
The scars of the downturn are still visible, however, with unemployment at 18.8%, the second highest in Europe after Greece, and any growth in jobs largely fueled by short-term, unstable contracts.
