Spanish GDP continues growing at a healthy pace

Spain's economy grew 1% in the second quarter, up from 0.9% in the first quarter of the year, according to a preliminary gross domestic product estimate from the country's statistics bureau INE.

The growth - in line with earlier indications by cabinet members and Spain's central bank - was mainly supported by strong private consumption which was boosted by low inflation, accommodative financial conditions and improving labour market conditions.

The increase was also driven by further strong gains in household spending and investment.

On a year-on-year basis, GDP grew 3.1%, up from the previous quarter's 2.7% annual gain.

It was Spain's eighth consecutive quarter of growth.

Statistics released on Thursday also revealed that the preliminary estimate for consumer prices fell back into negative territory to -0.1%, well short of expectations for a rise of 0.1% year-on-year.

Barclays analysts' continue to expect growth to come in strong in the coming quarters, although they pointed out that the uncertainty surrounding the general election could curb domestic demand and soften growth. Their forecast points to around +3.3% growth this year and 2.7% in 2016.

Capital Economic analysts said that while Spain's economic recovery gathered more pace in the second quarter, the large amount of spare capacity was still sustaining deflationary pressures in the economy.

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