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".

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