Spanish economy accelerates, Madrid's borrowing costs hit new lows

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Spanish economy accelerates, Madrid's borrowing costs hit new lows

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Spain’s economic growth is picking up. Between January and March, gross domestic product was up 0.4 percent from the final three months of last year.

The latest estimates from the Bank of Spain show that year-on-year GDP rose 0.5 percent in the first quarter. If confirmed, that would be the first annual growth for any quarter since mid 2011.

That means the eurozone’s fourth largest economy is on track to meet the central bank’s projections of 1.2 percent growth this year and 1.5 percent next year.

Spain’s economy has been shrinking or stagnated since its property bubble burst in 2008, but it came out of recession late last year.

At the same time the cost of borrowing for Spain on its medium- and long-term debt fell to its lowest on record as investors hunt for better returns in an era of low interest rates.

On Thursday the Spanish Treasury sold 5.6 billion euros ($7.74 billion) of bonds at yields not seen since at least the creation of the euro zone.

Another factor is that investors think the European Central Bank is going to be forced to implement measures, such as quantitative easing, to combat low inflation and a strong euro.

with Reuters