Last week the central bank raised its forecast for growth over 2016 to 3.2 percent and to 2.5 percent for next year.
Strong employment growth and the persistence of favourable financial conditions had sustained households' spending on goods and services, the Bank of Spain said in its monthly news bulletin. Investment in construction and non-financial firms had also picked up pace between October and December, it said.
Economy Minister Luis de Guindos said on Tuesday the economy would grow at between 0.7 percent and 0.8 percent in the fourth quarter.