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THE EURO ZONE

Cause for concern?

There were no surprises this Monday, when Spain's National Statistics Institute (INE) released initial data on the country's economic performance in 2016. In the final quarter of last year, the Spanish economy posted growth of 0.7%; overall, it expanded by a widely-predicted 3.2% in 2016. The INE's final statistics are expected in March, but they are unlikely to differ significantly from those released this week. Spain, then, retains its position as one of the fastest-growing economies in the eurozone, even during a year in which it lacked a proper government for ten months.

The farcical political limbo was finally terminated at the end of October last year, when the Socialists agreed to abstain from voting against Mariano Rajoy's bid to form the new administration. They thus enabled the unpopular Galician to come back for a second term as prime minister - a move for which they were praised and denounced in equal measure. The ideological compromises of their decision aside, though, the Socialists can be credited with snapping Spain out of political instability - and at great cost to the cohesion of their own party.

Indeed, some now fear that civil war within the PSOE - a war that was sparked last autumn by its accommodation of Rajoy and the subsequent resignation of its leader Pedro Sánchez - threatens to derail Spain's economic recovery just as last year's political deadlock did.

Paxti López, former head of the Basque regional government and a politician on the left of the PSOE's increasingly centrist stance, has announced himself as a candidate for its new leader (a post expected to be filled by June). López and Sónchez - who is standing again for the leadership - are appealing to those in the PSOE who were dismayed by its tacit support of Rajoy in October. The fear is, then, that if either of these two are at the helm of the Socialists come June, Rajoy's minority government will find it a lot harder to keep the country running smoothly.

It's certainly true that Rajoy would face greater opposition in congress if either Sánchez or Paxti take charge of the PSOE in a few months' time. Their unwillingness to cooperate would slow down the rate at which legislation is passed and new projects approved, both of which help to maintain economic growth.

Yet Monday's INE statistics on last year - for the majority of which Spain had no government - suggest that the impact of further political deadlock or limbo on the Spanish economy would be minimal. If Rajoy plays his trump card and calls another election in the spring, he risks tipping Spain back into the administrative vacuum that defined 2016; but as the precedent of last year indicates, Spain's GDP expansion would probably continue anyway, albeit at a slightly slower rate.