Spain sees GDP reaching pre-crisis level by end-2016

MADRID: Spain's economy grew at close to 4 percent in the first half of 2015, putting it on course to return to pre-crisis levels of output by the end of next year, Economy Minister Luis de Guindos said on Wednesday.

Spain's gross domestic product fell around 8 percent between the first quarter of 2008 and the second quarter of 2013, when it began emerging from a long downturn, and the economy - and the extent of its recovery - will be a key battleground in a national election due in November.

The return to growth offers endorsement of the Germany-inspired textbook recipe of austerity measures that international creditors are currently pressing Greece to follow in return for fresh funds. But there is still little to choose between the sky-high unemployment rates of both countries, with nearly one in four remaining out of a job in Spain's labour market.

Speaking in parliament, De Guindos said he expected the economy to register a higher growth rate in the three months from April to June than the 0.9 percent of the first quarter.

"This means that in the first half of this year, the economy will have grown close to 4 percent," he said, referring to the annualised rate.

"Since mid-2013 and until the second quarter we have recovered almost 4.5 percentage points of Gross Domestic Product contraction and by the end of next year, if things stay as they are, we will have recovered the income lost since the crisis started."

In April the government of Prime Minister Mariano Rajoy - whose party has been struggling in the polls despite the healthy GDP numbers - raised its 2015 economic growth target to 2.9 percent. It also said the jobless rate, still higher than when Rajoy took office in 2011, would fall more steeply than earlier forecast.

The centre-right government also projected the economy would grow at the same pace over the next three years and create at least 2 million jobs by 2018 to cut the unemployment rate to about 15 percent.

De Guindos said 1 million jobs would be added in 2014 and 2015 alone.