Spain’s economy sees biggest quarterly upsurge since 2007

The Spanish economy has stepped on the gas once again in the first three months of the year. Flash estimates by the National Statistics Institute (INE) show that gross domestic product (GDP) grew 0.9% between January and March, representing the biggest upsurge since late 2007, when the greatest crisis in half a century was about to hit Spain.

The figure will be confirmed in a month, but it mirrors another estimate made a month ago by the Bank of Spain, which talked about 0.8% growth for the first quarter compared with the last three months of 2014.

The Spanish economy has been expanding for nearly two years, after two back-to-back recessions

The new figure means the Spanish economy has been expanding for nearly two years, after two back-to-back recessions in the five previous years.

Year-on-year, output has advanced at a rate of 2.6%. This, and improving confidence in the Spanish economy have led the government to revise its 2015 growth forecast upwards from 2% to 2.9%.

This is even more optimistic than Brussels’ prediction of 2.3% growth and the International Monetary Fund’s forecast of 2.5% growth for Spain.

Last year, the Spanish economy grew 1.4% after five years in recession.

While the INE did not provide details as to what has fueled this first-quarter growth, other statistics point to greater domestic consumption as the main driving force, itself propelled by improved financing conditions and lower prices.

In an analysis published this week, the BBVA underscored “the slowdown in retail sales growth” but noted “the favorable evolution of other indicators of household spending, such as vehicle registration.”

As well as consumers, the state is also spending more again, to the tune of 20% of GDP. This increased public spending in an election year is also reflected in the latest employment figures, with construction contributing the greatest number of jobs.