After reducing Spanish growth prospects from 2.1% to 1.7% three months ago, the European Commission is now optimistic enough to have applied the biggest upward revision in the entire euro zone to Spain.
After several years of doom and gloom, Brussels is now holding Spain up as a role model for others to follow.
After three years of recession, the Spanish economy began to grow in 2014 and appears to be consolidating on the back of an improved labour market, better financial conditions, increased confidence and falling oil prices, according to the EC report, which was presented on Thursday.
This radical turnaround vindicates Spain’s Popular Party government, which had openly criticized Brussels’ pessimistic views in November. Now, the EC is even more optimistic than the International Monetary Fund (IMF), which recently forecast 2% growth for Spain in 2015.
The revised figures are the result of increased domestic demand fuelled by expectations of an incipient recovery and timid job creation, coupled with better financing conditions and falling oil prices. These are making up for lower exports.
Greater output, however, will not translate into similar progress for the Spanish labour market, where the unemployment rate is expected to remain above 20% until at least late next year.
Courtesy: El Pais
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