Spain Emerges from Two-Year Recession with 0.1% Growth

Spain finally emerged from recession in the first quarter of 2010, following nearly two years of negative growth, reports local Armenian business daily Capital.

The country's GDP grew 0.1% in the first three months of 2010, the Bank of Spain estimates, compared to a contraction of 1.3% a year earlier.

However, the country has taken six months longer than the rest of the Euro zone to come out of recession, and its economy remains under pressure.

Figures for Q1 show Spain has the highest unemployment rate in the Euro zone at 20.5%, which represents a doubling of the jobless rate since 2008.

Meanwhile, at 11.2% of GDP, Spain's deficit was the third largest in the Euro zone last year and the European Commission projects the gap will be larger than Greece's in 2010.

In January the Spanish Government has announced a four-year e50bn austerity package to bring down its deficit, but markets remain jittery on its prospects.

Last month, Standard & Poor's downgraded Spain's credit rating one notch from AA+ to AA, pointing to a slower than expected growth rate.

Spanish government bonds have been hit, with spreads over German bunds reaching a 14-month high at 171 basis points.