Spanish Economy Roaring Back to Life

June 25, 2015Spainby EW News Desk Team

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Spain has the fifth largest economy in the European Union, but it may soon be climbing the ranks. According to a recent report by the Associated Press (via ABC News), the Spanish Economy Minister, Luis de Guindos, believes the Spanish economy is growing at the strongest rate since the nation slumped -- along with the rest of the world -- during the economic crisis and global recession that began in 2008.

Spanish economic performance following the economic crisis was relatively poor. As of 2012, over 25 percent of the Spanish workforce remained unemployed. Worse, the economy experienced a "double dip" recession, remaining in recession until the third quarter of 2013. Most other European nations emerged from the recession within several quarters, not several years.

However, Spain turned the corner thanks to a number of significant economic reforms. The new leaner, meaner Spanish economy is now one of the fastest growing in Europe. Indeed, by the end of 2013, the nation managed to attain a trade surplus for the first time in three decades. Things have only improved since that milestone achievement.

De Guindos' comments on Wednesday indicated that the economy grew at a rate of close to 4 percent higher over the first six months of 2015 than during that same period in 2014. That rate of growth is more than half a percentage point higher than the government initially forecast, brightening hopes of both the Spanish government and investors that Spain may truly be out of recession and on the way to true economic expansion.

According to de Guindos, growth in the second quarter should exceed the 0.9 percent quarter-on-quarter rate recorded in the first three months.

Particularly strong for the Spanish economy: the banking industry in the services sector. Several Spanish banks have grown at astounding rates, marking greater success for the Spanish banking industry than many of its European neighbors. This expansion follows the collapse of the nation's banking system following years of reckless lending akin to those practices experienced in the United States.

The news was welcomed by the ruling Popular Party, that faces elections later this year. The party's popularity has slid in recent years, so party leaders are hopeful that this welcome news of a booming economy will similarly boost their numbers at the polls. However, the news did not appear to reach investors in time before the close of trading in Madrid as the IBEX 35 fell 0.71%.

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