In the first quarter of 2014 the rate of recovery of the Spanish economy has continued to gain traction, with quarterly GDP growth 0.4% up on the last quarter of 2013. Improved economic activity and employment (though the improvement in jobs is still very moderate) is supported by a reduction in financial tension, looser fiscal policy, the soundness of the foreign sector and the positive impact of some reforms.
The following is of note with respect to the financial system:
- The financial assistance program concluded officially on January 22. In its latest monitoring report published in February, the International Monetary Fund (IMF) highlighted the success and speed of achievement of all the restructuring measures agreed with the “Troika”.
- Royal Decree-Law 4/2014 reforming the Insolvency Proceedings Act, was passed on March 7. It streamlines and makes more flexible the processes for reaching refinancing agreements and eliminates rigidities in the law on insolvency and composition with creditors.
- The deleveraging process continues, although the flow of new consumer finance operations and loans to small companies for under a million euros continues to improve on the previous year.
- For the first time in many quarters, the balance of total non-performing loans declined, and in February the NPA ratio in the system fell slightly to 13.4%.
- The improved market conditions have allowed some banks to tap the wholesale markets and to continue to repay ECB loans; the March figure was slightly under €184 billion.
