Spain's economy grew between October and December as domestic demand and investments improved, data showed, adding to signs that its recovery from recession is slowly gaining traction.
Gross Domestic Product (GDP) expanded by 0.2% in the fourth quarter from the third, its second quarterly expansion in a row, Thursday's final National Statistics Institute (INE) data showed. The economy contracted 0.2% year-on-year.
Both figures were below INE estimates given earlier this year of a 0.3% quarterly expansion and a 0.1% annual drop, though analysts played down the growth gap.
In Spain, domestic demand is worth around two thirds of output and, after a burst property bubble in 2008 left millions out of work, has been a heavy drag on the economy as both consumers and businesses reined in spending.
The economy shrank 1.2% in 2013 from a year earlier, its fourth annual contraction in five years and cutting its overall worth to 1.023 trillion euros ($1.40 trillion U.S.) - the lowest figure since 2006.
In the fourth quarter, domestic demand had a negative drag on GDP of 0.6 percentage points compared to 2.5 percentage points a quarter earlier. Exports lifted GDP by 0.4 percentage points, down from 1% a quarter earlier.
Household spending grew in the fourth quarter on an annual basis for the first time since the start of 2011 and while investment remained negative, dragged down by a still weak construction sector, it was the strongest reading in six years.
The return to economic growth in the third quarter and better-than-expected expansion towards the end of the year, prompted the International Monetary Fund and European Commission, to upgrade their forecasts for this year.
Prime Minister Mariano Rajoy said in his state of the nation address earlier this week he saw the economy growing 1% this year and 1.5% next.
In a further boost for the euro zone's fourth-largest economy, which less than two years ago was close to needing billions in international aid, Moody's rating service raised its debt rating for the first time since its 2010 AAA rating was downgraded.
But Spain is still experiencing serious imbalances, notably a 26% unemployment rate and one of the highest budget deficits in the euro-zone.
