Zapatero says economy grew in first quarter, sales up

SPAIN'S prime minister said yesterday there was likely to have been economic growth in the first quarter after data showed retail sales rose in March for the first time since 2007.

But growing fears about contagion from Greece's debt crisis overshadowed hopes of an end to Spain's deep recession, forcing Spanish bond spreads over benchmark German Bunds out to their highest levels since the euro was launched.

The premium on 10-year Spanish bonds over Bunds rose to as much as 136 basis points, from 109 basis points on Tuesday. “It's likely that in this first quarter of the year we have had positive GDP growth,” Prime Minister Jose Luis Rodriguez Zapatero told parliament.
The economy contracted by 0.1 percent in the fourth quarter of 2009, marking the seventh successive quarter of negative gross domestic product.
Supporting an improvement in Spain's economy, retail sales rose 2.1 percent year-on-year in March, the first increase since November 2007. “This data reflects that the economic situation is improving little by little, but we are comparing with a yearly decline of 8.2 percent in March 2009,” said Estefania Ponte, an economist at BNP Paribas Fortis. “Consumption may have bottomed in Spain and we face a less negative outlook for consumption,” he said.
Also hinting at a brighter outlook was data showing spending by foreign tourists rose 5.4 percent in March, although not in the Balearics.
Labour Minister Celestino Corbacho said unemployment figures for April would be “relatively good”.
Spanish unemployment around 20 percent, the highest in the euro zone, has been a major factor preventing the country from rebounding from its worst recession in decades.

A leak revealed this week that unemployment hit 20.5 percent in the first quarter, up from 18.8 percent in the last quarter of 2009.
The official figures for first quarter unemployment are due to be released tomorrow.