Spain's economy expanded for the fifth straight quarter from July to September, official data showed on Thursday, holding to weak recovery from recession while the rest of the eurozone stalled.
The country is pulling away from deep problems arising from a property crash and the eurozone debt crisis, and has enacted tough reforms against a background of high unemployment.
Spanish gross domestic product grew by 0.5 percent in the third quarter from output in the previous quarter, according to initial figures from the national statistics institute.
That marked a slight easing from growth of 0.6 percent in the second quarter.
The Spanish economy, the eurozone's fourth biggest, has achieved modest but steady growth since emerging last year from its recession after the collapse of a property boom in 2008 that brought the country to the verge of default.
Prime Minister Mariano Rajoy said the economy "had experienced a 180 degree" turnaround and was now one of the fastest growing in Europe.
He credits his conservative government's radical reforms of public finances, the banking system and the labour market for the economic upturn.
The statistics institute did not provide any breakdown of its third-quarter estimate but it was the same as one issued for the period by the Bank of Spain last week.
The central bank said consumer spending was driving growth, while declining unemployment and stronger consumer and business confidence are also helping the economy to get back on track.
"Domestic demand is strengthening and now contributing to the recovery a great deal. This is a recent development, and for the better, because for about a year the recovery has been almost exclusively reliant on exports," investment bank Morgan Stanley said in a note.
The economy grew by 1.6 percent over 12 months, up from 1.3 percent in the second quarter, according to the statistics institute.
The government forecasts growth of 1.3 percent this year, a switch from shrinkage of 1.2 percent last year, and expects this to accelerate to 2.0 percent in 2015.
Germany, with the eurozone's biggest economy, earlier this month cut its growth forecasts to 1.2 percent this year and 1.3 percent in 2015.
France, the eurozone's second-biggest economy, recorded zero growth in the first two quarters while Italy is in recession.
- Deflation, high unemployment weigh -
Although Spain is on track to meet its growth target for this year, the government's forecast for 2015 "is very optimistic", said Josep Comajuncosa Ferrer, an economics professor at Barcelona's ESADE Business School.
Meeting the growth target next year will depend on what happens in Spain's neighbours, its main trading partners, and the success of measures taken by the European Central Bank to ease the flow of credit, he added.
"The Spanish economy is not immune to what happens in Europe," Spanish Economy Minister Luis de Guindos said Thursday.
Falling consumer prices and high unemployment could also cause Spain's recovery to stutter.
Spain's EU-harmonised inflation rate dropped 0.2 percent in October, its fourth straight monthly decline, according to preliminary national statistics institute figures.
"We are going through a period of deflation," said Comajuncosa Ferrer.
Although Spain's unemployment rate dipped under 24 percent in the third quarter for the first time since 2011, at 23.7 percent it remains one of the highest rates in the industrialised world.
There are 1.79 million households where everyone is out of work.
The government forecasts the unemployment rate will end the year at 24.2 percent and fall to 22.2 percent by the end of 2015.
The economic crisis has deepened inequality.
Spain is the second most unequal country in the EU after Latvia and is the country where inequality has risen the most among the 57 nations that make up the Organisation for Security and Co-operation in Europe (OSCE), the head of the Spanish branch of international aid agency Oxfam, Jose Maria Vera, told a news conference.
"The three richest people own as much as 20 percent of the poorest people," he said.