Spain’s Q3 GDP Shows Formal Exit From Two-Year-Long Recession

 @AmruthaGayathri on October 30 2013 5:46 AM
Madrid market
A customer shops at a market in central Madrid pictured on Sept. 30, 2013. Reuters

Spain’s economy grew 0.1 percent in the third quarter of 2013 compared to the previous quarter, in line with expectations, confirming that the country's economy had officially come out of a two-year-long recession, data from the National Institute of Statistics on Wednesday showed.

The quarterly expansion was in line with the Bank of Spain’s estimate and was the first rise since the first quarter of 2011. However, on a yearly basis, the gross domestic product, or GDP, dropped 1.2 percent, as expected, but showed marginal improvement from a 1.7 percent annual decline in the preceding quarter.

“An official breakdown is not yet available, but the pick-up is likely to have been driven by developments in the external sector,” Ben May, European economist at Capital Economics, said in a note.

“Encouragingly, the business surveys suggest that Spain’s recent strong export performance will continue in the near term,” May said. “But falling wages, weak employment growth at best and the poor state of households’ finances suggest that a recovery in household spending could be some way off. We are penciling in a below consensus 0.5% contraction in GDP next year.”

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