Highlighting the growing competitiveness of Spanish goods, the Bank of Spain said that exports were likely to continue driving the nation's growth through next year, ending more than two years of negative GDP growth.
But while exports contributed 0.4 percentage points to third quarter growth, internal demand had a negative impact of 0.3 points. From January to August, exports rose 6.6 percent from a year earlier to a record 155.8 billion euros ($214.6 billion), while retail sales fell for the 38th month running in August.
Last month, the government presented its budget for 2014 based on a forecast that the Spanish economy will grow by 0.7 percent next year. Rajoy is depending on exports to drive growth as austerity continues to hold back domestic demand.
Third quarter unemployment data is due on Thursday, with analysts polled by Reuters expecting the rate to be around 26.1 percent.
"Spain is out of the woods in terms of a worst case scenario of needing a full bailout, but it's going to be a very long-term recovery. Unemployment is going to continue to be very high for a number of years,'' said Antonio Barroso, an analyst with the London-based Teneo Intelligence consulting firm.
"Is the recession over? Yes, from an academic point of view. But has the crisis being suffered by Spaniards ended? No," added Javier Flores, an analyst with the Asinver investment group.
Gayle Allard, a labor market specialist with Madrid's IE Business School, told the Economic Times that Spain's export success had yet to translate into many new jobs because the new business only emerged after companies "cut costs to the bone."
The Bank of Spain also mentioned on Wednesday that job destruction was still ongoing, albeit at the slowest level (0.1 percent) since the crisis began.
While Budget Minister Cristobal Montoro yesterday said that Spain was close to generating enough growth to create jobs, the IEE, a research institute linked to the country's largest business lobby CEOE, called on the government this week to deepen spending cuts and lower taxes to help companies.
"In the grand scheme of things, it's (third-quarter growth is) not going to be enough to solve Spain's existing problems as companies need a period of reasonably solid growth to hire and that'll take a while," told Ben May, a European economist at Capital Economics in London, to Bloomberg.
Nonetheless, "a positive figure for Spain is a big deal from a psychological point of view because it's the first in a number of quarters," May said.