Spain economy outlook ‘better than expected’ with GDP growth forecast

In its quarterly economic outlook, the Bank of Spain raised its forecast from an earlier estimate of 3.1 percent published in June, and also predicted GDP growth of 2.8 percent in 2016 – up from 2.7 percent.

“The evolution of activity in the last quarter of the year is slightly better than what had been anticipated in September,” it said.  

Spain's incumbent Prime Minister Mariano Rajoy had vaunted Spain's economy recovery from a devastating crisis in his campaign for re-election in Sunday polls, predicting that growth would stand at 3.3 percent this year.    

Whether this convinced voters is unclear as his ruling conservative Popular Party won the elections, but without the absolute majority it needed to form a government as millions cast their ballots for two, upstart political groupings.

Rajoy implemented steep spending cuts, tax rises, and salary freezes for civil servants after he took office in 2011 to try and drag Spain away from economic collapse.

The country officially exited recession in late 2013 and the economy grew by 1.4 percent last year as consumer spending and investment improved.    

That was its first full year of growth since a property bubble burst in 2008, throwing millions of people out of work.  

But despite better growth figures, Spain's official unemployment rate remains extremely high at more than 21 percent.