The Spanish economy is picking up speed. According to flash estimates by the Bank of Spain, gross domestic product (GDP) grew 0.8% in the first three months of the year from the previous quarter.
This represents 2.5% year-on-year growth.
This slight acceleration from the end of 2014 comes amid better financing conditions thanks to the European Central Bank’s stimulus program, the depreciation of the euro against the dollar, falling oil prices and an uptick in household spending.
Against this backdrop, the Bank of Spain has raised its 2015 growth forecast from 2% to 2.8%. More expansion is expected in 2016, with an average annual rate of 2.7%, one tenth of a point less than 2015.
Spain’s central bank justified its increasingly optimistic outlook by underscoring the improved macroeconomic conditions thanks to national and European policies.
‟All of this has led to better financial conditions, a reactivation of the net job creation flow, a progressive reduction of the public deficit and significant improvements in competitiveness, which taken as a whole create a favorable scenario for a prolonged expansion of economic activity throughout the period considered in the forecast,” reads the Bank of Spain’s report.
In the last quarter of 2014, Spain posted some of the strongest economic growth in the entire euro zone (0.7%), matched only by Germany among the continent’s largest economies.
This increase in output was mostly due to increased household spending, which represents the largest portion of GDP (equivalent to 56% of national demand), according to figures released in late February by the National Statistics Institute.
Last year, the Spanish economy grew an average 1.4% after six years of nearly continuous recession (except from a nearly unnoticeable period of growth in 2010).