Spain showed signs of recovery from a two-year recession after its gross domestic product (GDP) climbed a little from July to September, according to the projection of the Bank of Spain on Wednesday.
The Bank of Spain estimated that the country’s GDP rose by 0.1%, however it is still 1.2% lower than its recorded GDP in the same quarter a year ago. Spain’s GDP fell by 1.6% year-over-year in the second quarter last year. Spain’s exports increased by 0.4%.
Spain’s economy went into recession after suffering a housing bubble, which resulted to the bankruptcy of many companies, unemployment rate soared to 26%, and the nearly collapse of the banking sector. The European Union forced the Spanish government to restructure its four nationalized banks to become more viable in the long-term without the need for a bailout.
According to the Bank of Spain, The slight recovery in activity in the third quarter after the fall a quarter earlier is due to… a more favorable contribution from the external sector.”
Based on the monthly economic bulletin of the Bank of Spain, the employment situation in the country improved and estimated a reduction of 0.1% quarter-over-quarter or -0.3% on a yearly basis. The current employment rate will be the least unfavorable rate since the crisis, if the employment rate will be confirmed.
Take note that the figures provided by the central bank is just an estimate, and the preliminary GDP data for the third quarter will be released by INE, the national statistics agency of Spain on October 31.
The monthly economic bulletin also indicated that the financial markets in Spain experienced improvement almost the same as the European level, and the business investments started to grow since the beginning of this year.
“Meeting the deficit target-at 6.5% GDP- is a pivotal entrenching the improved perception of the Spanish economy and to shoring up agents’ and markets’ confidence,” according to the Spanish Bank.
Ignacio del Torre, economist at financial advisory firm Arcano projected that Spain will eventually emerged from the crisis next year. He said, “After recently implemented reforms, Spain has become an export powerhouse. It will fully leave the recession behind in 2014 with private investment and consumption growth turning positive after three years of decline and credit levels stabilizing.”