Spanish economy grew 0.2 percent in last quarter of 2013

The Spanish economy grew 0.2 percent on a quarterly basis in the last three months of 2013, 0.1 percentage points below the original estimate by the National Statistics Institute (INE).

In a report released Thursday, the INE confirmed that on an annual basis GDP contracted 1.2 percent last year. The economy emerged from its longest recession since the restoration of democracy in the third quarter of last year, when GDP was up 0.1 percent from the previous three months.

The recovery in household spending continued apace in the last quarter of the year, increasing 0.5 percent on a quarterly basis, the same rate of growth as in the third quarter. However, public spending contracted 3.9 percent, the biggest decline since the current conservative Popular Party government took power at the end of 2011. Investment spending rose 0.7 percent quarter-on-quarter, matching the increase of the previous three months.

Growth in exports accelerated to 0.8 percent from 0.6 percent while imports declined 0.6 percent after a fall of 2.1 percent in the period July-September.

The negative contribution of domestic demand to overall GDP narrowed to 0.6 points from 2.1 points in the third quarter, while external demand’s contribution declined to 0.4 points from 1.0 points. In absolute terms, GDP amounted to 1.022 trillion euros.

“Domestic demand will drive growth going forward,” Bloomberg quoted Victor Echevarria, an economist at BNP Paribas in London, as saying. “As the labor market stabilizes, net trade’s contribution to growth will continue to fall and will be replaced by domestic consumption.”

Employment fell an annual 1.6 percent in the fourth quarter, equivalent to a net loss of 265,000 full-time jobs, after contracting 3.3 percent in the previous three months. Wages were up 0.8 percent compared with the fourth quarter of 2012 when the government withdrew the traditional end-of-year bonus payment to public workers.