Spanish economy turns in a star performance

The Spanish economy has notched up a growth rate not seen since before the financial crisis.

TheSpanish economyhas turned the corner, notching up a growth rate not seen since before the financial crisis. GDP grew by 0.7% in the fourth quarter of 2014, marking the sixth successive quarter of expansion. In 2014 as a whole, growth reached 1.4%. The EU has raised its 2015 growth forecast for Spain to 2.3%, 1% above the eurozone average.

As Morgan Stanley notes, until recently the rebound "was solely reliant on one engine: exports. Now there are two engines: exports plus domestic demand." Retail sales rose by 6.5% year-on-year in December, their fastest growth in a decade. Falling prices, lower energy costs, and record-low mortgage rates have all bolstered spending.

Investment has picked up too, says Fiona Maharg-Bravo on breakingviews.com. Foreigners are once again investing billions in property, with the construction sector expected to expand for the first time in seven years.

There is a long way to go, with unemployment still at 24% and underemployment high. And the rebound has not been fast enough to lower support for populist groups such as Podemos. But Spain has "come a long way". With the economy's momentum looking strong enough to ensure growth of 3% this year, Spain "has become the eurozone's star performer".

Recommended

Plenty more Brexit arguments to be settled yet
Brexit

Plenty more Brexit arguments to be settled yet

Many important negotiations remain to be sealed in our deal with the EU. “No deal is better than a bad deal” is the way to play it, says Matthew Lynn
10 Jan 2021
Will 2021 hold one last deflation scare?
Global Economy

Will 2021 hold one last deflation scare?

With many looking ahead to a world of high inflation, John Stepek looks at a couple of potential scenarios that could give the world one last deflatio…
28 Dec 2020
Will a stronger euro ruin Europe's rally?
European stockmarkets

Will a stronger euro ruin Europe's rally?

International investors have been buying into European stocks, driving the euro higher. But that surge now risks dampening the recovery that started i…
21 Sep 2020
No deal is the best deal for Britain – and the EU too
Brexit

No deal is the best deal for Britain – and the EU too

Europe has a lot to gain from a thriving, independent Britain, says Matthew Lynn.
6 Sep 2020

Most Popular

Bitcoin: fool’s gold or the new gold?
Bitcoin

Bitcoin: fool’s gold or the new gold?

With bitcoin hitting new highs last week, and close to becoming a mainstream investment, is it really gold for the 21st century?
15 Jan 2021
The MoneyWeek Podcast: bitcoin special
Bitcoin

The MoneyWeek Podcast: bitcoin special

Merryn talks to bitcoin experts Dominic Frisby and Charlie Morris to get the lowdown on the cryptocurrency to find out why it's such a huge global phe…
15 Jan 2021
Leasehold reforms promise the end of a nightmare for many homeowners
Property

Leasehold reforms promise the end of a nightmare for many homeowners

Horror stories about unscrupulous landlords profiting from a legal relic of the feudal era are about to get a happy ending, says Simon Wilson.
16 Jan 2021
Free 6 issue trial then continue to