Spain economy in solid cyclical recovery mode

Barclays sees a soild recovery in Spanish economy due to the following aspects

• Spain's GDP recorded 0.9% q/q growth in Q1, is expected to accelerate further in Q2. As in other EA economies, growth is driven by private consumption (low inflation, better labour market), but private investment and public consumption also grew at a decent pace.
   
• Improving financial and credit conditions will remain supportive of growth, facilitating lending dynamics and pushing non-performing loans further down. Nearly all relevant indicators are now signalling a recovery in the housing sector.
   
• The economic outlook of Italy for H2 15 and 2016 remains strong, although some slowdown is likely. The country's GDP is likely to grow by 3.3% this year and 2.7% next year as domestic demand slows, partly offset by a stronger contribution from net exports as key trading partners experience slightly better growth and market shares continue to improve, the bank estimates.