Spain Ekes Out of Recession

Spain's GDP grew by 0.1% between July and September driven by stronger exports, evidencing the recessionary environment is lifting. Nonetheless, the country's unemployment rate at over 26% remains a monumental roadblock. Expect the results of the austerity programs and the improved environment will help bring the country fully out of recession in 2014 with private investment and consumption growth turning positive after three years of decline and credit levels stabilizing.

Spain's economy has emerged from recession after growing for the first time in more than two years, according to estimates from the Bank of Spain. Spain's economy has been struggling ever since the credit crisis struck in 2008. However, perhaps there is a light at the end of the tunnel, as the country's economy had been helped by stronger exports in the past quarter. Nonetheless, the country's unemployment rate of more than 26% remains a noteworthy obstacle.

Spain is out of recession, according to Spain’s central bank.  Spain's economy has emerged from recession after growing for the first time in more than two years, according to estimates from the Bank of Spain.

Spain's gross domestic product (GDP) grew by 0.1% between July and September, the bank said.  However, GDP was still 1.2% lower in the quarter compared with the same period last year. 

Spain's economy has been struggling ever since the credit crisis struck in 2008. However, perhaps a light at the end of the tunnel is emerging, as the country's economy had been helped by stronger exports in the past quarter. A favorable contribution from the international sector helped drive the slight recovery in activity in the third quarter. As the external factors improve, Spain has the capacity to become an export powerhouse. 

Spain has been one of the countries worst hit by the fallout from the credit crisis.  The crisis burst the country's housing bubble, and its banks needed government bailouts to survive after being left holding hundreds of billions of euros in bad debts. But now, evidence indicates that the recessionary environment is lifting.  It is likely that the country will fully leave the recession in 2014 with private investment and consumption growth turning positive after three years of decline and credit levels stabilizing.

Nonetheless, unemployment remains a monumental roadblock. The country’s unemployment rate of more than 26% is the second highest in Europe, behind Greece. According to Spain’s Labour Ministry, the number of unemployed in Spain increased by 25,572 in September from a month earlier to reach a total of 4.7 million, showing the first increase in 6 months. Year-on-year, the number of persons out of work has increased 0.41 percent. Nevertheless, this was the lowest rate of change since June 2007. 

On a seasonally adjusted basis, the number of unemployed was 4.83 million. This was 35,631 fewer than in August. Registered unemployment decreased in agriculture, construction and industry sectors but increased in services. 

Registered unemployment has fallen by 124,368 so far this year, representing the largest cumulative decline since 2006.

Government austerity measures aimed at cutting Spain's large deficit prompted huge protests across the country last year. However, the government recently claimed that the end of the recession was near, saying reforms and austerity measures were paying off.

One month one quarter don’t create a pattern, however, these signposts do indeed suggest a positive trend may be emerging. Time will tell. However, positive news and positive trends are most welcome in Spain, after so many years of negatives. 

 

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