Spanish growth beats expectations at 3.5% in 1S2015

Mr De Guindos said that expectations raised by the Spanish government, pointing to an increase in GDP of 2.9% for the whole year and the creation of 600,000 jobs, are “prudent and cautious” to prevent any bias downward.

The Spanish Economy Minister said the 4.2% deficit target will be met thanks to the economic recovery and increasing tax collection, which are “even exceeding”  government projections. According to official estimates, Spain is going to save this year about €1.5 billion provided by the reduction of public debt interests and unemployment benefits since the labour market is slightly improving (yet the jobless rate is still at 23.8% of the active population).

Spain was one of the best placed euro members in Brussels’ quarterly economic forecasts of main economic indicators published a week ago. Euro zone economic growth as a whole will be stronger than previously expected this year thanks to cheaper oil, a weaker euro, stable global growth and supportive fiscal and monetary policies.

Analysts at JP Morgan noted that May PMIs will be important, and markets could react negatively to a bad number.

“We need Europe PMIs to increase by 1bp during 2Q so that our estimates for a 2.5% growth for the eurozone can become a reality,” they said.