The Bank of Spain said that Spain's economy grew in the first quarter at the same pace as the previous three months as the nation struggled to rein in a growing debt burden and the highest unemployment rate in the euro region.

The Bank of Spain estimated that gross domestic product grew 0.2% in the first three months of 2011, matching the fourth quarter growth rate and expanded 0.7% a year earlier. The positive contribution of exports grew while domestic demand had a negative impact.

Spain, home to almost a third of the euro region’s unemployed, is relying on exports to spur the recovery as austerity measures aimed at slashing the budget deficit by half in two years undermine consumer spending. Unemployment and steps to contain the debt crisis are eroding support for the ruling Socialists, who are set to lose most of the regional elections they face this month.

Mr Giada Giani, an economist at Citigroup in London, said that "Domestic demand is still largely negative and the only positive contribution comes from exports. There's been a mix of data recently that suggests the second quarter could be weaker than the first."

Meanwhile, National Statistics Institute said in a separate report that industrial production fell 0.9% in March from a year earlier, pulled down by a decline in consumer goods. Retail sales slumped 8.6% from a year earlier in March in the ninth decline, while home prices continue to fall after the collapse of a decade long property boom.

(Sourced from www.bloomberg.net)