Thanks to exports, the Spanish economy is growing for the first time in two years

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It’s not much, but it will do. In its latest economic assessment (pdf), the Bank of Spain reckons that the country’s GDP grew 0.1% in the third quarter, compared with Q2. If confirmed by official statistics released next week, that will mark the first time Spain’s economy has grown in more than two years.

The country’s long and painful recovery from a dizzying, property-driven boom and bust is thanks largely to foreign trade. With 26% unemployment and a banking system struggling to cope with mountains of bad debt, Spanish consumers are not in the mood to open their wallets. Thus, an improvement in the country’s trade balance—thanks to a combination of rising exports and falling imports—explains the economic turnaround.

Since it belongs to the euro zone, Spain cannot devalue its currency to make exports instantly cheaper. Instead, austerity and labor market reforms are slowly producing an “internal devaluation,” in which cost cuts and wage freezes make Spanish goods and services more competitive on the world stage. Though it will give the six million Spaniards still out of work little solace, the latest data suggest that this process is working.

On the country’s formidable unemployment problem, the Bank of Spain sees signs that the return to economic growth is feeding through to the labor market. Although jobs are still declining, the pace of decline in the third quarter was the “least unfavorable rate recorded since the start of the crisis.” When things are as bad as they are in Spain at the moment, it is worth celebrating any improvement, however small.