Economy starts to grow as GDP predictions more optimistic

SPAIN'S Gross Domestic Product (GDP) will increase by 0.9 per cent this year and 1.9 per cent next year – signs that the economy is growing once again, according to figures released by the BBVA bank.

This will be enough for creation of 'sustainable' employment to begin, says the entity, but it warns that jobless figures are unlikely to drop below 25.6 per cent this year and 24.8 per cent in 2015.

Consumer spending in Spain is expected to rise in 2014 by 0.9 per cent and by 1.3 per cent next year, with lack of national demand gradually ceasing to pose barriers to micro-economic growth over the next two years and ongoing efforts in increasing exports will set the scene for the economy to begin its recovery, the BBVA reveals.

It predicts that this will only be possible if Spain's government continues with its radical blanket reforms, including fiscal and labour-related, saying efforts in the former area in particular are 'insufficient', running the risk of the country failing to meet its debt target of 6.5 per cent of the GDP for 2013.

Any fiscal reform should 'encourage job creation and household savings nationally' whilst 'attracting foreign investment' and 'increasing growth potential', the BBVA report continues.

Spain's economy minister Luis de Guindos, who originally set the country's predicted growth for the year at 0.7 per cent, believes forecasts may be revised to one per cent very shortly.

The government is obliged to send details of its macro-economic forecasts to Brussels in April so that the European Union can amend its current requirements and restrictions.

De Guindos says a recovery is 'visible for the first time' and that the economy is undergoing a 'change of cycle'.

“During a change of cycle, nothing goes in the same direction – there are negative and positive signs which can contradict each other, but the general perception is of that of improvement,” the minister states.