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Pick Up In Spanish Growth

James Boston
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Pick Up In Spanish Growth

Preliminary economic and price growth data has just been released by the Spanish National Institute of Statistics, there is evidence of economic expansion in the second quarter but inflation is failing to take hold.

Year on year GDP growth has been announced as 1.2%, this is double the first quarter number and outperforms economists estimates for 1.1% expansion. Quarter on quarter the figure growth figure is also up, at 0.6% the Q2 number beats the first quarters 0.4% and also tops the anticipated reading of 0.5%. This growth in the Eurozones fourth largest economy has largely taken markets by surprise, Spain’s central bank released guiding predictions last week which were easily beaten by today’s growth figures. This is the first time that the Spanish economy has posted two consecutive growth quarters since the crises began and the current readings position it as one of the fastest growing economies in an otherwise struggling Eurozone.

Full year growth forecasts for the Spanish economy are now 1.5% for this year and 2.0% in 2015, this is according to a recent statement by Spain’s Economy and Competitiveness Minister, Luis de Guindos, who went on to note that the Government plans to upwardly revise the country’s economic outlook before the end of September.

Despite the welcome pick up in economic growth in the Spain, the preliminary Inflation data for the month of July is showing that prices are now in fact contracting. The Harmonized Index of Consumer Prices (HICP) is showing a preliminary figure this month of -0.3% when measured on a year on year basis, this is a reversal of last month’s 0.1% growth and lower than the market anticipated figure of -0.1%. Month on month the HICP number contracted by -0.9%, this represents a fall on last month’s 0.0%, market consensus expected no change to this number.

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