Spain’s economy grew faster than the UK during 2016, as the tentative recovery in one of the countries hardest hit by the Eurozone crisis stabilises further.
Growth of 0.7 per cent in the final quarter was enough to push growth in 2016 to 3.2 per cent, according to preliminary estimates from the National Statistics Institute (INE).
While the annual growth rate has slowed over the last two quarters, the relatively high rate of growth continues the economy’s return from a deep recession following the Eurozone’s debt crisis.
The UK's annual growth reached two per cent in 2016, the fastest of the G7 group of nations, of which Spain is not a member.
The continued growth at a time of relatively low but rising inflation will add weight to the European Central Bank’s (ECB) contention its continued loose monetary policy stance is necessary to support the Eurozone’s economy.
The ECB has struggled to boost lending for growth in the economy since its governor Mario Draghi committed to do “whatever it takes” to keep the euro intact.
In 2012 Europe’s fifth largest economy shrank by 2.9 per cent as the banking sector neared collapse. In 2014 the economy returned to growth, which has been steady at 3.2 per cent for the last two years.
However, the Spanish economy still bears deep scars from the crisis, with unemployment still above 18 per cent (although at levels lower than those seen since 2009).
The youth unemployment rate has risen over the last year, despite a growing economy, to stand at 44.4 per cent, the highest of the Eurozone’s major economies.
The high unemployment has contributed to deep political discontent, with radical challenger movement Podemos becoming a powerful force in Spanish electoral politics.