Spain’s battered economy recovered slightly in the first quarter with growth of 0.2 per cent and has now “decoupled ” from those countries under EU and IMF bail-outs, the Bank of Spain said yesterday.
“In the opening months of 2011, the Spanish economy continued growing at a weak rate against the background of the progressive recovery in the world economy, but one not free from the emergence of fresh causes for uncertainty,” it said.
“The estimates made drawing on the conjectural information available suggest that GDP posted a quarter-on-quarter increase of 0.2 per cent in the first quarter of 2011, unchanged on the previous quarter.”
Year-on-year, “output continued on the path of slow recovery seen in previous quarters,” with growth of 0.7 per cent.
The Central Bank said household spending “continued to show signs of a weak recovery”, and noted “the buoyancy of goods exports and the notable recovery in tourism”.
Spain had now successfully “decoupled from the group of countries most affected by the tensions on sovereign debt markets”.
“Market perceptions came around to drawing this distinction thanks, among other reasons, to the new measures adopted to strengthen Spanish credit institutions’ solvency and to the headway made in structural reform, following the approval of the draft Bill on pension reform.”
The Spanish economy slumped into recession during the second half of 2008 as the global financial meltdown compounded the collapse of the once-booming property market. It emerged with meagre growth in early 2010, but ended the year with a contraction of 0.1 per cent.
Spain, where the economy is the size of the Greek, Irish and Portuguese economies combined, is now battling to convince markets that it should not be lumped together with the three lame ducks now under EU and IMF rescue terms.
The government has enacted reforms to strengthen bank balance sheets, cut state spending, make it easier to hire and fire workers, lower the retirement age and sell off assets.
Prime Minister Jose Luis Rodriguez Zapatero has vowed to bring the country’s annual public deficit below an EU ceiling of three per cent of output in 2013. The public deficit hit 11.1 per cent of GDP in 2009, the third-highest in the eurozone after Greece and Ireland, before falling to 9.24 per cent last year.
The economy is also struggling with an unemployment rate that soared to 21.29 per cent in the first quarter, the highest in the industrialised world.
The Bank of Spain has imposed tighter controls on banks in a bid to restore confidence to nervous markets.
The National Statistics Institute (INE) will release official first-quarter growth figures on May 13. The Central Bank’s estimates are usually a good indication of the INE figures.
The Bank of Spain in March predicted the economy will grow by 0.8 per cent in 2011 and 1.5 per cent in 2012, well below the government’s forecasts of 1.3 per cent and 2.3 per cent respectively.