Spanish GDP, property market continue to recover

Economic activity in the Eurozone’s fourth largest economy accelerated more than expected at the start of the year.

Spain’s gross domestic product (GDP) expanded at a 0.9% quarter-on-quarter on clip in the first three months of the year, the country’s statistics office, INE, said in a statement.

That was better than the 0.7% pace logged in the final quarter of 2014 and economists’ forecasts of 0.8%.

The year-on-year rate of expansion picked up to 2.6% from 2% in the fourth quarter.

A breakdown of the data was not available in Thursday’s release.

However, the most recent high-frequency indicators show that private consumption continues to be the main driver, driven by trends in employment, real wages, increased financial wealth and lower personal income taxes, Barclays’s Antonio Garcia Pascual pointed out to clients in a research note.

Investment is also expected to contribute positively to growth, in contrast with many euro area peers.

As in Ireland, the property market is improving.

“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,” Pascual added.

The Barclays analyst revised higher his projection for Spanish GDP growth this year to 3% from 2.75% beforehand.