Follow Spain Investment Immigration and Spain's Economic updates: In the three months ending in September, Spain’s economy has returned to growth, emerging from a recession that lasted over two years, severely impacted public finances and led to a quarter of the workforce being unemployed.
Preliminary statistics from the Bank of Spain indicate that the Gross Domestic Product (GDP) grew by 0.1% in the third quarter, a slight increase compared to the previous three months, marking a long-awaited turnaround in the trajectory of the Spanish economy. Prior to this, the Spanish economy had contracted for nine consecutive quarters.
The Bank of Spain analysis states that Spain has once again benefited from strong export performance, and as unit labor costs continue to decline, export momentum is expected to strengthen further.
The Bank of Spain predicts a "slight increase in household consumption" in the third quarter, further indicating that the gradual recovery is expanding to other sectors of the economy, and domestic demand in Spain will gradually strengthen. However, it warns that "the still unfavorable labor market outlook and high household debt suggest that consumption will not significantly recover in the short term."
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 grim, and it appears that a growth rate sufficient to increase employment cannot be achieved in the short term," said Antonio Cabrales, an economics professor at University College London (UCL).
Federico Steinberg, an economist at the Madrid think tank Real Instituto Elcano, stated: "This is good news. But we should not be overly optimistic, as we still have a long way to go in terms of reforms. We still need to improve competitiveness, ensure that credit begins to flow again, further adjust the labor market, and we must improve education, research and development, and regulation."
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.