Bank of Spain cautiously optimistic on economy

Source: EUObserver

Continuing its slow but steady recovery, Spain has once again posted improved growth figures for the second quarter of this year.

The Gross Domestic Product (GDP) rose to an annual rate of 2.2% between April and June according to figures released in the Bank of Spain's quarterly report on Monday (4 August).

The rise represents a 0.6% gain over the quarter.

The Bank says that the pick-up was largely thanks to the improved global outlook, robust consumer spending and low interest rates.

Government growth forecasts for the year may now be reachable according to the financial daily Cinco Dias.

"With this advance, the new prediction of the government for the whole year (2.3%, against an initial estimate of 3%) gains credibility", according to the paper.

However, while rising salaries pose a possible domestic risk, geopolitical tensions and the fate of the eurozone's largest economies, particularly Germany, continue to cloud the sky over the region.

"The horizon, without doubt, is not yet clear of risks, doubts still remain as to whether some of the most dynamic economies now find themselves in a position to firmly join the path of sustained growth".

Ahead of eurozone average

Spain's figures are well ahead of the eurozone average. For the same period, European Central Bank figures show the zone's growth hovering at around 1%.

"A notable divergence continues to be measured between rhythms of growth in Spain and the EMU [European Economic and Monetary Union], therefore blocking the process of real convergence", says the report.

But other economic indicators seem to indicate Spain is moving closer to the European average in other areas.

Also on Monday, INEM, Spain's national employment agency said there was a fall in registered unemployment in July of just under a quarter of a percentage point to 8.39%.

However some put the figure much higher. According to Eurostat, the EU's statistical body - who use a wider definition of unemployment - Spain's rate in May stood at 11%, the highest in the EU.

The EU average stood at 8.8% in May by the same measurement.