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Spanish economy gathers pace, minister says challenges ahead

Source: Reuters - Thu 30th Jan 2014
 Spanish economy gathers pace, minister says challenges ahead

Spain's economy grew for a 2nd straight quarter in the final 3 months of 2013, data showed, as the economy minister highlighted challenges ahead, notably bringing down the country's high unemployment rate.

The economy grew 0.3%on a quarterly basis, up from 0.1% expansion in the previous quarter, Thursday's National Statistics Institute (INE) data showed.

That was in line with forecasts by economists polled by Reuters and by the Bank of Spain.

On an annual basis, the economy shrank by 0.1%, a narrower contraction than the 1.1% of the previous quarter and also in line with economists' expectations.

Signs of a recovery in domestic demand, which shrank at slower pace between October and December than previous quarters, and growing exports helped lift the economy at the end of 2013, INE said.

Spain's economy has been in and out of recession since a property bubble burst 6 years ago, gutting domestic demand and sending unemployment soaring to record highs. However, the number of people without jobs fell at the end of 2013 from a year earlier, the first annualized drop in 6 years.

"These are positive elements which, to some extent, show we've left the recession behind, but we still have a great deal to do. The path ahead is full of obstacles which, above all, includes an unemployment rate of 26%," Economy Minister Luis de Guindos said during a radio interview on Thursday.

Stronger-than-expected economic data in the second half of last year prompted economists to raise their growth forecasts for 2014, with Guindos saying earlier this week he expected growth of around 1% this year, up from the official 0.7% target.

In 2013, the economy contracted by 1.2% from a year earlier after shrinking 1.6% in 2012, INE reported. Final data with a breakdown of Q4 GDP will be published February 27.