* Spanish GDP grows 0.2 percent in fourth quarter from
* Misses forecasts, but recovery still on track, say
* Growth boosted by tentative upturn in domestic demand,
By Paul Day
MADRID, Feb 27 Spain's economy grew between
October and December as domestic demand and investments
improved, data showed, adding to signs that its recovery from
recession is slowly gaining traction.
Gross Domestic Product (GDP) expanded by 0.2 percent in the
fourth quarter from the third, its second quarterly expansion in
a row, Thursday's final National Statistics Institute (INE) data
showed. The economy contracted 0.2 percent year-on-year.
Both figures were below INE estimates given earlier this
year of a 0.3 percent quarterly expansion and a 0.1 percent
annual drop, though analysts played down the growth gap.
"There's been a small downward revision, but it doesn't
change the overall picture dramatically," said Silvio Peruzzo,
economist at Nomura.
"The recovery is clearly on track and accelerating with
investment and consumer demand improving."
In Spain, domestic demand is worth around two thirds of
output and, after a burst property bubble in 2008 left millions
out of work, has been a heavy drag on the economy as both
consumers and businesses reined in spending.
The economy shrank 1.2 percent in 2013 from a year earlier,
its fourth annual contraction in five years and cutting its
overall worth to 1.023 trillion euros ($1.40 trillion) - the
lowest figure since 2006.
In the fourth quarter, domestic demand had a negative drag
on GDP of 0.6 percentage points compared to 2.5 percentage
points a quarter earlier. Exports lifted GDP by 0.4 percentage
points, down from 1 percent a quarter earlier.
Household spending grew in the fourth quarter on an annual
basis for the first time since the start of 2011 and while
investment remained negative, dragged down by a still weak
construction sector, it was the strongest reading in six years.
The return to economic growth in the third quarter and
better-than-expected expansion towards the end of the year,
prompted the International Monetary Fund and European Commision,
to upgrade their forecasts for this year.
Prime Minister Mariano Rajoy said in his state of the nation
address earlier this week he saw the economy growing 1 percent
this year and 1.5 percent next.
In a further boost for the euro zone's fourth largest
economy, which less than two years ago was close to needing
billions in international aid, Moody's rating service raised its
debt rating for the first time since its 2010 AAA rating was
But Spain is still nursing serious imbalances, notably a 26
percent unemployment rate and one of the highest budget deficits
in the euro zone.