UPDATE 1-Bank of Spain sees GDP growth picking up to 2 pct in 2015

Wed Jul 23, 2014 5:30am EDT

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MADRID, July 23 (Reuters) - The Bank of Spain revised up its economic growth forecasts for this year and next on Wednesday, saying it expected a 2 percent expansion in 2015 after internal demand and business investment gathered pace in recent weeks.

The central bank, which now sees the Spanish economy growing 1.3 percent this year compared to 1.2 percent previously, had forecast in March that gross domestic product would grow by 1.7 percent in 2015.

The central bank said GDP had probably grown 0.5 percent between April and June compared with the previous quarter, after a 0.4 percent expansion in the first three months of 2014.

"The private components of domestic expenditure - consumption and business investment, essentially - were the mainstay of GDP in Q2," it said in its economic bulletin.

"This prolonged a pattern prevailing since the recovery began in mid-2013, marked by the progressive strengthening of domestic demand."

Spain has been in or near recession since a decade-long property bubble burst in 2008, though it expanded at its fastest quarterly pace in six years between January and March, raising hopes it had turned a corner.

Unemployment remains the second highest in Europe, at 25.9 percent, however, and the deficit is not set to drop to the European Commission's recommended 3 percent until 2016. (Reporting by Julien Toyer; Editing by Catherine Evans)

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