Spanish GDP expands as property market makes swift recovery

Spain's GDP expanded at a rate of 0.9% in the first quarter this year, according to INE the national statistics office. Up from 0.8% in the last quarter of 2014, the data reveals an accelerating growth for the Eurozone's fourth largest economy and a year-on-year expansion of 2.6% from 2% in the previous quarter.

A spokesperson from Barclays indicated that the rise in private consumption is elevating economic activity at a faster rate than previously forecasted, driven by improving employment rates, stabilising incomes and lower personal income taxes. Further, the lending power of financial situations is also steadily improving which is expected to give way to a rise in both national and international investment – more so in Spain and in Ireland than in any other country in the EU.

The Barclays analyst predicts the Spanish GDP will grow by 3% this year, rather than at a rate of 2.75% as was previously projected. Adding, "Investment in real estate is likely to continue showing a very gradual recovery as the real estate sector is turning. Housing prices have printed two consecutive quarters of positive growth (after an almost 40% correction since the peak in early 2008); overall, we expect the housing market recovery to be more L shaped than V shaped".

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