Spanish economy scrapes out of recession - official data
Spain scraped out of recession in the first quarter, boosted by a rise in exports and household spending, final official data showed yesterday, but analysts warned any pick-up may be short lived.
The Spanish economy, Europe's fifth biggest, grew by 0.1 per cent during the first three months of the year over the previous quarter, ending six quarter of contraction, according to final data from the national statistics institute.
Exports rose two per cent on a quarterly basis while household spending was up 0.5 per cent, its second consecutive quarterly increase, it said.
On a yearly basis, the economy shrank by 1.3 per cent after declining by 1.8 per cent in the previous quarter.
The figures confirm preliminary data for the quarter which it released on May 12.
Spain is the last major world economy to emerge from recession.
But analysts cautioned that the rise of two percentage points in the value-added tax in July and the impact of an unemployment rate of just over 20 per cent means any uptick in consumer spending will not last long.
"With exporters suffering from a severe lack of competitiveness and domestic demand set to be squeezed by a prolonged bout of fiscal tightening, it seems very unlikely that Spain is on the cusp of a strong and sustained recovery," said Ben May, an economist at London-based Capital Economics.
Economy and Finance Minister Elena Salgado said on Tuesday that government budget cuts will shave "a few decimal points" off the government's prediction of growth of 1.8 per cent next year.
The government predicts the economy will shrink by 0.3 per cent this year after contracting by 3.6 per cent in 2009.
Last week the government ann-ounced austerity cuts worth €15 billion over two years in a new bid to shore up Spain's public finances after stocks plunged over fears it could follow Greece into a debt crisis.
The measures include a five per cent pay cut for public sector workers from June, a freeze on state pensions and wage freeze from next year.
The cuts are on top of a €50 billion austerity package announced in January designed to slash public deficit to the eurozone limit of three per cent of gross domestic product by 2013 from 11.2 per cent last year.
Spain entered its recession in the second quarter of 2008 as the global financial meltdown compounded a crisis in the Spanish property market, which had been a major driver for growth in the preceding years.