Spain is about to record the biggest economy growth since 2007, again surpassing the market expectations. The consensus in early 2017 was that the economy would lose momentum this year, with the latest reforms gradually diminishing its effect. But now the economy is restoring its recovery, which has allowed the government to raise its forecast twice. Some economists even predict the best year since the start of the recovery in 2014.
After the Spanish economy grew by 3.2% last year, faster than average growth in the other Eurozone countries, surveys and macroeconomic data show that momentum is on the rise. Banco Bilbao Vizcaya Argentaria SA (BBVA) and Bankia SA say the economy will surpass last year’s growth, reaching 3.3% in 2017.
If they are right, this will be the fastest growth since 2007, before the downturn in the housing market and the fall of the country into a severe recession. The economy may have risen by 0.9% in the second quarter, which is the fastest pace in the past two years.
BBVA expects growth to continue on a backdrop of improvements in household consumption, exports, growth in services helped by the tourism sector that is about to record record visits. The expectations were to slow down the economy, but that did not happen – the economy is still very dynamic.
Spain’s positive mood coincides with the 5-year anniversary of Mario Draghi’s head of the European Central Bank for “what is needed”.
Five years ago, he pledged to deploy all the necessary tools to protect the Eurozone and strengthen confidence in the region. At that time Spain was the problem child of the euro: it had to save its troubled banks, unemployment was a record high and the government was forced to apply unpopular reforms to the labor market.
Meanwhile, the International Monetary Fund also made a positive assessment earlier this month when it revised up its forecast for economic growth from 2.6% to 3.1%, the second positive revision in the last seven months. The Fund justified its decision with the impact of reforms, easier access to credit, and a more balanced growth model that has a greater focus on exports and is less dependent on construction.