Spain's economy picked up pace in the fourth quarter, official data showed on Thursday, adding to signs that the country is emerging from five years of stop-start recession which destroyed millions of jobs. The Spanish economy expanded by 0.2 percent in the fourth quarter from the third, accelerating from the previous quarter's growth of 0.1 percent, the National Statistics Institute said in a report. The figure were below earlier estimates by the institute and the Bank of Spain that the eurozone's fourth-biggest economy grew by 0.3 in the October-December period. Spain's economy shrank by 1.2 percent over the whole of 2013, its fourth annual contraction in five years, as the country struggled with the aftermath of a decade-long property bubble that burst in 2008. The institute's figures "confirm the start of the recovery of economic activity," the economy ministry said in a statement. Prime Minister Mariano Rajoy said on Tuesday in his state of the nation address that he saw the economy growing by 1.0 percent this year and by 1.5 percent next. The Spanish government's growth forecast in the 2014 budget had been for 0.7 percent, but a boom in exports led it to lift that forecast. Spain's trade deficit fell by almost half in 2013 to 15.9 billion euros ($21.8 billion) as exports hit a record, driven by a push by Spanish firms into new markets outside Europe. Rajoy credited his tough economic reforms and austerity policies with pulling Spain back from the precipice of a full-blown bailout, widely feared in mid-2012. "Spain was seen as a burden for Europe and now it is seen as a motor," he said. Rajoy also reiterated his government's prediction that Spain's battered economy would generate jobs this year. Spain is grappling with an unemployment rate of just over 26 percent, one of the highest rates in Europe, which has caused consumers abd businesses to rein in spending, putting a drag on growth. But domestic demand, which accounts for about two-thirds of Spain's economic output, had a "less negative impact" on gross domestic product (GDP) in the final quarter of 2014, the statistics institute said. It had demand had a negative drag on GDP of 0.6 percentage points compared to 2.5 percentage points in the third quarter. Though avoiding a widely feared economic rescue in mid-2012, Spain's government obtained a 41.3-billion rescue loan from the eurozone to save tottering banks, whose assets had been hammered by plunging property values. Besides slashing spending to rein in Spain's yawning public deficits, the government reformed the labour market in 2012 by cutting dismissal costs and making it easier to change work conditions.