Bank of Spain estimates Q1 growth of 0.2 pct

AP News
Posted: May 06, 2011 5:46 AM

The Spanish economy grew just 0.2 percent for the second quarter running during the first three months of 2011, as exports helped offset prop up an economy hit by soaring unemployment and other woes, the central bank said Friday.

The Bank of Spain said the country is still seeing a "modest recovery" after nearly two years of recession.

Compared with the first quarter of 2010, Spanish output was up 0.7 percent, according to the estimates.

The quarterly figures provided by the bank are an estimate that are usually followed up a week or so later by numbers from the National Statistics Institute. The two sets tend to agree.

The bank says domestic demand was down slightly so the rise in first-quarter GDP came from a boost in exports as economies in Spain's trading partners recovered.

Spain is saddled with the eurozone's highest jobless rate of 21.3 percent, and the government says the figure will not start to come down until the second half of this year. The number of unemployed is a record 4.9 million.

The Finance Ministry forecasts the economy to grow by 1.3 percent in 2011, but the central bank and the IMF put the figure lower, at 0.8 percent.

In Friday's report, the Spanish central bank said household consumption was weak because of the high jobless rate, declining property values, tight credit at banks and other lenders and rising inflation that is eating away at purchasing power.