(MENAFN- AFP) Spain's economic growth accelerated in the first quarter, provisional official data showed Thursday, delivering a possible boost to the government in an election year even though unemployment remains high.
The economy expanded by a faster-than-expected 0.9 percent in the January-March period, up from 0.7 percent in the previous quarter, provisional figures from the National Statistics Institute showed.
It was the seventh consecutive quarter of economic growth and the biggest expansion since the fourth quarter of 2007, before Spain's slump into recession began.
On an annual basis, the eurozone's fourth-largest, grew by 2.6 per cent in the first quarter, up from 2.0 per cent in the previous three month period.
Spain expanded by 1.4 percent in 2014 -- its first full-year of growth since a property bubble burst in 2008, throwing millions of people out of work -- due to increased consumer spending and business investment.
Retail sales rose for the eighth month in a row in March after mostly falling over a three-year period, the National Statistic Office said Wednesday.
Like many of its eurozone partners, the country has also benefited from sliding oil prices as well as a weaker euro which has helped boost exports.
"The Spanish recovery is now moving onto a higher plane, elevated by a supportive external environment, namely lower crude oil prices and the recent slide in the euro," said Raj Badiani, an economist at IHS Global Insight.
Spain's ruling conservative Popular Party has made the improving economy the centrepiece of its campaign strategy for municipal and regional elections on May 24 and a year-end general election.
Prime Minister Mariano Rajoy on Monday said the government expects the country's economy to expand by 2.9 percent this year and by a "similar" figure in 2016.
The government had previously expected growth to reach 2.4 percent in 2015.
"Spain will have the strongest growth of the big economies of the eurozone," Rajoy said.
"This growth forecast means that we will create over half a million jobs this year," he added.
- Mass unemployment -
The ruling Popular Party faces a stiff challenge from two new fast-growing political parties, anti-austerity Podemos and centre-right Ciudadanos, which have tapped into anger over corruption and the state of the economy.
While Spain has returned to growth, the country still struggles with mass unemployment.
The jobless rate, which hit a low of 8.6 percent in 2007 at the height of the property boom, stood at 23.8 percent in the first quarter, the highest level in the European Union after Greece's.
The International Labour Organization expects Spain's jobless rate to remain above 20 percent until the end of the decade.
The government predicts Spain will end the year with a jobless rate of 22.2 percent but it could revise this figure when it sends its new economic forecasts to Brussels later on Thursday.
Unions and opposition parties complain however that most jobs that are being created are temporary contracts with little job security and low wages.
"At this stage, a major risk to a strengthening recovery is the prospect of limited support to job seekers, with firms continuing to offer temporary contracts to satisfy new labour demand requirements alongside modest wage awards," said Badiani.
Household gross disposable income in real terms in 2014 was 10 percent below its peak in 2009, he added.
IHS Global Insight predicts Spain will miss its target of bringing its budget deficit down to the equivalent of 4.2 percent of output this year.
Analysts are watching this year's elections in Spain closely amid signs that the traditional two-party system, which has dominated the country since it returned to democracy after the death of dictator Francisco Franco in 1975, is crumbling.
The general elections this year "could deliver fragmented governance, implying the end of Spain's stable political environment," and lead to policy changes, Badiani warned earlier this week.
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