Spain Inches Into Recovery But Spaniards Don't Feel It

Europe's fourth-largest economy is out of the red. The Bank of Spain says the Spanish economy grew 0.1 percent in the third quarter of this year, marking an end to the longest economic slump in Spain's democratic history. Spain's recovery is critical to the economic health of Europe overall. It's bigger than all the bailed-out economies — Ireland, Portugal, Greece and Cyprus — combined. But unemployment in the country still tops 26 percent, and it could be a while before Spaniards feel the fruits of that recovery.

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A surprise from the eurozone's fourth largest economy: Spain has finally emerged from recession. And among the investors taking a chance on Spain's shaky recovery is Microsoft founder Bill Gates.

From Madrid, Lauren Frayer reports.

MARIANO RAJOY: (Foreign language spoken)

LAUREN FRAYER, BYLINE: About a month ago, Prime Minister Mariano Rajoy started slipping into his speeches the idea that Spain's recession was over. That was news to many Spaniards, millions of whom are out of work. Twitter exploded into satire when the head of Spain's biggest bank, Santander, went as far as to say Spain's economy is fantastic.

EMILIO BOTIN: (Foreign language spoken)

FRAYER: Money is pouring in from everywhere, Banco Santander CEO Emilio Botín exclaimed in New York last week. The Spanish Twitterati branded him as supremely out of touch. The average Spanish family does not feel money pouring in. Their wages are falling as taxes go up.

But it seems Rajoy and the bankers were on to something. The Bank of Spain announced today that the Spanish economy grew a tenth of a percent in the third quarter. That's tiny but significant. It marks an end to the longest economic slump in Spain's democratic history.

RAJOY: (Foreign language spoken)

FRAYER: Exports and tourism have been the main engines of our economy, Rajoy said today in a sort of victory speech. We're out of recession, starting a slow and gradual recovery.

Among those betting on Spain's recovery, Microsoft founder Bill Gates. This week he invested more than $150 million in a Spanish construction company, Fomento de Construcciones y Contratas FCC, the very industry that torpedoed Spain's economy.

GAYLE ALLARD: This has two readings, of course.

FRAYER: Economist Gayle Allard from the IE Business School.

ALLARD: This is the one most of Spain is taking: We are on our way out of this. And Bill Gates sees it and that's why he's here.

FRAYER: But there's a negative reading too.

ALLARD: Spanish construction companies have fallen in value so much that this is a bargain basement purchase.

FRAYER: The recession may technically be over, says economist Juan Jose Toribio at Spain's IESE Business School.

JUAN JOSE TORIBIO: But it doesn't mean that we are overcoming the crisis at all. Because after all, it's only a 0.1 percent increase. That's not enough to create the jobs that Spain needs to create.

FRAYER: Unemployment here is at 26 percent and double that for youth. New third quarter figures come out tomorrow. But the public isn't likely to feel this recovery for months, at least.

And as night fell over Madrid, students took to the streets protesting the latest budget cuts to public education.

(SOUNDBITE OF PROTEST)

FRAYER: And teachers go on strike tomorrow.

For NPR News, I'm Lauren Frayer in Madrid.

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