Spain confirms fastest growth in six years

Spain on Wednesday reported its fastest economic growth in six years in the first quarter of 2014 despite the blight of a 26-percent unemployment rate.

Spain confirms fastest growth in six years
Photo: PromoMadrid/Flickr

Gross domestic product grew at a quarterly rate of 0.4 percent in the first three months of the year, official data showed, the quickest pace since a 2008 property crash tipped the nation into a double-dip recession.

The data from Spain's national statistics office — while still preliminary — confirm a recent Bank of Spain monthly report, citing the same figure.

Nevertheless, activity in the eurozone's fourth largest economy is too weak to offer hope for the six million people seeking in vain for a job.

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The unemployment rate climbed to 25.93 percent in the first three months of 2014, up from 25.73 percent in the previous quarter, official data show.

As many people gave up looking for work or fled the country, the workforce in Spain contracted by 187,000 people, yet the unemployment queue shrank by only 2,300 people to 5.93 million.

With unemployment high and incomes under stress, sluggish demand within Spain is simultaneously depressing the price of goods and services, raising fears of a deflationary spiral.

Fresh data showed Spanish consumer prices rose at an annual rate of just 0.3 percent in April, a turnaround from the previous month's 0.2-percent decline yet still below the eurozone's inflation target of nearly 2.0 percent.

If prices fall on a broad front for a sustained period, they can lead people to postpone purchases in the hope of getting a cheaper deal later, stalling activity.

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