Spain exited its multi-billion dollar aid program at the end of 2013, but economists are uncertain whether growth lies ahead for the country this year — despite upbeat economic data out on Thursday.
Factory activity in Spain climbed in December, according to the Markit PMI (purchasing managers index) published on January 2, rising 2.2 points to 50.8, with export orders reading a healthy 53.0. A reading over 50 marks expansion.
Meanwhile, Anfac, the Spanish car maker association, said car sales in 2013 were up a healthy 3.3 percent on the previous year.
Bond markets received the data well, with yields on benchmark 10-year Spanish debt — used to calculate mortgages and other consumer loans — falling below 4 percent for the first time since May last year.
However, analysts were unconvinced that the recent uptick in Spanish exports was sustainable enough to drive economic expansion in 2014.
Ben May, European economist at Capital Economics, said export growth had been driven by a renewed focus on exports by companies that produced goods both for foreign and domestic markets — a trend that could not continue indefinitely.
"There will really be a need for firms to start exporting that don't already. But given that a lot of those Spanish firms are pretty small, and perhaps aren't as so competitive as those that already export… then that second leg of the external adjustment might be rather slower," May told CNBC.
"Exports will continue to be a relative bright spot, but it may be that exports don't pick up any further, and could slow if the euro continues to strengthen," he added. A stronger euro hits exports by making them more expensive on the global market. The euro appreciated 8.1 percent against the dollar over the course of 2013.
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Mike Ingram, a market strategist at BGC Partners, told CNBC on Thursday the austerity measures imposed in the country after its 41.3 billion ($56.4 billion) euro bailout from the euro zone would continue to weigh on Spain's growth in 2014.
While May added that any growth in 2014 would be anemic, given that the country's fiscal consolidation still had a long way to go.
"There are certainly a lot of problems still in place that mean that growth is likely to be sluggish at best," he said. "Austerity is going into place for some time yet, which will constrain domestic demand. There are still high levels of household and corporate debt and there's a risk that that coupled with possible deflation in Spain could still lead to quite a prolonged period of balance sheet adjustment."
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Huw Pill, Goldman Sach's chief European economist, concurred that Spain's economic reforms and restructuring measures had contributed to problems including high unemployment, but argued that the outlook was brighter for the medium-term.
"We're not that optimistic on the short-term outlook for growth for Spain," Pill told CNBC in December. "But we do think because of the reforms, quite a lot of opportunities have been created beneath the surface. And looking 18 months down the road, that's a country where there's grounds for more optimism."