Spain’s battered economy rallied further in the first quarter with 0.2 percent growth as reforms eased market fears it will be the next eurozone bailout case, the Bank of Spain said on Friday. Spain has now successfully “decoupled from the group of countries most affected by the tensions on sovereign debt markets,” it said three days after Portugal agreed rescue terms.
“Market perceptions came round to drawing this distinction thanks, among other reasons, to the new measures adopted to strengthen Spanish credit institutions’ solvency and to the headway made in structural reform, following the approval of the draft bill on pension reform.” Spain, with an economy the size of the Greek, Irish and Portuguese economies combined, has been battling to convince markets that it should not be lumped together with the three lame ducks now under EU and IMF rescue terms.
The government has enacted reforms to strengthen bank balance sheets, cut state spending, make it easier to hire and fire workers, lower the retirement age and sell off assets. “In the opening months of 2011, the Spanish economy continued growing at a weak rate against the background of the progressive recovery in the world economy, but one not free from the emergence of fresh causes for uncertainty,” the Bank of Spain said.
The estimated first-quarter growth of 0.2 percent was the same as in the previous quarter. For 2010 as a whole, the economy contracted 0.1 percent. The central bank said that household spending “continued to show signs of a weak recovery.”
