In the three months ending in September, Spain's economy returned to growth, emerging from a recession that lasted more than two years, severely impacting public finances and leading to a quarter of the workforce being unemployed.
Preliminary statistics from the Bank of Spain indicate that Spain's Gross Domestic Product (GDP) grew by 0.1% in the third quarter, a slight increase from the previous three months, marking a long-awaited turnaround in the trajectory of the Spanish economy. Prior to this, the country's economic output had declined for nine consecutive quarters.
The Bank of Spain noted: “Against the backdrop of easing financial tensions and increased confidence, the Spanish economy has continued its gradual improvement since the beginning of the year.” It added that Spain has once again benefited from strong export performance. The central bank stated that as unit labor costs continue to decline, export momentum is expected to strengthen further.
Analysts welcomed the news but cautioned that Spain is still far from achieving a growth rate sufficient to alleviate the country's severe unemployment problem. “The worst may be over, but the situation in Spain remains bleak, and it appears that a growth rate sufficient to increase employment is not achievable in the short term,” said Antonio Cabrales, an economics professor at University College London (UCL).
However, expectations for a return to growth may further boost the confidence of the Spanish government. Recent economic data and a shift in investor confidence towards Spain have greatly encouraged the Spanish government.