LONDON (Financial Times) - The Spanish economy is growing faster than at any time since the start of the financial crisis seven years ago, amid signs that the country’s recovery is gaining in breadth and feeding through into all parts of the economy.
Output in the final quarter of 2014 rose 0.7 per cent compared with the previous three-month period, according to a flash estimate released by Spain’s statistics office on Friday. The increase was higher than forecast, and marks the sixth quarter of economic growth in a row.

Political and business leaders in Madrid will be particularly pleased to see that the upward trend remains unbroken, despite fears that the recent slowdown in the eurozone would drag down Spain’s economy as well. The latest data also showed that Spain’s economy grew by 1.4 per cent over the course of 2014, its best performance by far since the start of the crisis.
The government of Mariano Rajoy, which faces an election towards the end of the year, predicts that Spain will grow by at least 2 per cent in 2015 –— an increase that would probably make Spain the fastest-growing of the larger eurozone economies this year.
Madrid’s optimism is increasingly shared by independent forecasters, who point out that the Spanish economy is set to benefit from a number of fresh tailwinds this year: "The increasingly broad-based recovery suggests Spain is well positioned to take advantage of supportive factors in early 2015, namely lower energy costs, a weaker euro, and a cut in personal and corporate taxes,” said Raj Badiani, an analyst with IHS Global Insight in London.
Analysts at Morgan Stanley, the investment bank, noted that Spain was no longer dependent on exports alone to drive economic growth: "Consumer spending and business investment are contributing to the recovery a great deal. This is a development for the better, because for about a year the recovery has been solely reliant on one engine: exports. Now there are two engines: exports plus domestic demand,” the bank said in a research note.
One lingering concern for economists is the increasingly sharp fall in prices in Spain, which has stoked fears in some quarters that the country could slide into outright deflation. Official estimates released on Friday showed that inflation in January was negative once again, with prices falling by 1.4 per cent compared with the same month in 2013.
The decline followed drops of 1 per cent in December and 0.4 per cent in November, and confirms that deflationary pressures in Spain are accelerating.


Most analysts believe, however, that Spain is experiencing a bout of "good deflation”, meaning that the fall in prices is not leading consumers to delay spending. Spanish retail sales in December rose by 6.5 per cent compared with the previous year, the fastest rate of growth in more than a decade.