Spanish economy showing stability in second quarter

Spanish economy showing stability in second quarter and exceeded expectations for growth, despite that lawmakers are struggling to form a government after seven months and two parliamentary votes. The gross domestic product grew by 0.7% during the period from April to June 2016, which is slightly above the average expected by the economists. On annual basis the increase amounts to 3.2%.

Preliminary data do not contain details of the various components of GDP, but according to a number of economists recovery is driven by household consumption, which benefited from a more stable labor market and easing financial conditions. In the second quarter of 2016, the unemployment rate dropped to 20%, which is the lowest level in nearly six years.

On Thursday, the Prime Minister Mariano Rajoy adopted the mandate by King Felipe for another attempt to form a government. After two rounds of elections that produced ambiguous results, 61-year-old Rajoy said he would try to find support from the political spectrum to form a cabinet. In his words, he is even considering to head a minority government if the opposition agree at least on major agenda items. However, yet there is no guarantee that Rajoy will undergo a vote of confidence needed to become prime minister.

The current Minister of Economy Luis de Guindos raised his forecast for economic growth and said that unemployment could fall more by the end of this year. It is expected the administration to submit a renewed economic forecasts later on Friday. Spain has yet to approve the annual expenditure ceiling, which would be the first step towards forming the budget for next year. The deadline for this is September. On Thursday, Rajoy said that the draft should be sent to Brussels for approval before October 15.

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