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Spain's central bank backs recovery talk

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Spain's central bank backs recovery talk
File photo: Antonio Tajuelo/Flickr
16:00 CEST+02:00
Spain's job-destroying recession is set to ease in the second quarter of 2013 as activity improves, the Bank of Spain said on Wednesday, adding its voice to an optimistic chorus emerging from the government.

The central bank sees light ahead for Spain, a country which has been wallowing since 2011 in a double-dip recession.

"The latest information related to the second quarter points overall to an improvement in most indicators of demand and activity and an easing in the pace of contraction," it said in a monthly report.

The message arrived one week after the International Monetary Fund said the Spanish recession may be coming to an end while warning that the "outlook remains difficult".

Prime Minister Mariano Rajoy's conservative government is touting signs of recovery in Spain after applying a bitter medicine of austerity to curb a bulging deficit, sparking mass protests.

Economy Minister Luis de Guindos last week said Spain, the eurozone's fourth-largest economy, which has yet to recover from the blow of a 2008 property crash, was emerging from the recession.

Budget Minister Cristobal Montoro agreed, saying the economy was at a turning point.

The latest Bank of Spain report says household and retail confidence in April and May had improved slightly since the first quarter, a positive sign for consumption which has collapsed under the weight of mass unemployment.

Even in the devastated property sector, the Bank of Spain said the available data pointed to a moderation in the slump in construction investment.

Trade remained a bright spot, the central bank said, with exports in March and April combined rising 10.9 percent from a year earlier, "which underlines the strength of foreign sales".

Spain's economy shrank by 0.5 percent on a quarterly basis in the first three months of 2013. The government is predicting a 1.3-percent economic decline this year and a slow recovery in 2014.

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