Spain Exits Recession But Recovery Years Away

Spain's economy has finally emerged from recession but with shaky GDP growth of just 0.1% measured in the third quarter.

The figure, announced by the country's National Statistics Institute, ended more than two years of contraction following nine straight quarterly declines but it could still be revised when more information becomes available next month.

The institute said the economy grew by 0.1% in the July to September period compared to the previous quarter, when it shrank by the same rate but on a year-on-year basis, the economy contracted by 1.2% as dismal domestic spending offset gains in exports.

The government has admitted that while the recession may have technically ended, it could take years for the country to recover from the economic crisis.

A quarter of the Spanish workforce remains unemployed

It continues to face almost daily anti-austerity protests amid anger over continuing cuts to public services, including education, to help manage its debt burden and maintain the confidence of the markets.

Spain's second recession in five years was sparked by the collapse of a building boom in 2008 which just last year made the country a focus of concern for the stability of the whole eurozone.

The health of the country's banks - damaged by toxic mortgage loans - remains a concern while consumer spending has slumped amid a jobless rate of 26% which only started to improve during the summer after two years of growth.

Spain has relied on tourism to fuel spending

More than 50% of the country's 15 to 24 year olds not in education are without work while Spain has also witnessed a so-called brain drain, with many thousands fleeing abroad to seek employment.

A report on the latest economic statistics from analysis group Capital Economics said: "While economic prospects are considerably better than a year ago, particularly in the external sector, domestic weakness is likely to hold back any recovery in the wider economy.

"We expect the unemployment rate to remain around its current high levels for some time yet and public debt to continue to climb."

The Spanish government expects an overall GDP contraction of 1.3% for 2013 - slightly better than the 1.6% in 2012 - before a return to timid annual growth of 0.7% in 2014.

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