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Spain's economy shakes off two-year recession in third quarter

October 23, 2013|By Shan Li
  • The Bank of Spain in Madrid, above, announced that the nation's recession was over.
The Bank of Spain in Madrid, above, announced that the nation's recession… (Kiko Huesca / EPA )

Spain pulled out of two years of recession in the third quarter, news that should give a boost to the efforts of its prime minister to repair the nation's economy though tax increases and spending cuts.

The Bank of Spain said Wednesday that gross domestic product grew 0.1% in the third quarter, compared with a 1.2% drop in the same period a year ago.

The news, while positive, has been viewed skeptically by some economists who point out the Spanish economy has slipped more than once into recession in the last five years. In 2008, the first recession hit after the country's real estate bubble popped. After a brief recovery, a banking crisis plunged the country back into recession two years later.

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Still, signs of a recovery, including a pickup in exports, could bolster Prime Minister Mariano Rajoy as he tries to convince Spaniards that his austerity measures will ultimately create jobs and drive an economic boom.

Some economists took Spain's recovery as a sign that European countries ravaged by the global financial crisis, such as Greece and Portugal, may also be following suit.

"The worst is over. One by one, the euro crisis countries are returning to growth after a savage adjustment recession," Holger Schmieding, an economist at Berenberg Bank, wrote in a note on Wednesday. 


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