The Spanish economy is recovering "better than expected" and is now among Europe's best performers, although it still faces "numerous" problems, Prime Minister Mariano Rajoy said Friday.
"Things are going better than we expected. We are registering healthy and diversified growth which is here to stay," he said during an annual end of term press conference.
"In less than two years we have gone from being an economy on the brink of a bailout to being one of the economies that is growing the most in Europe," he added.
"We are going in the right direction, but we are conscious that there is still much to do and the problems that we must tackle are still numerous."
Economy Minister Luis de Guindos said on Tuesday the government planned to raise its 2014 and 2015 economic projections in September after stronger-than-expected performance over the last six months.
He said the forecasts are likely to be raised to growth of 1.5 percent this year, up from a previous estimate of 1.2 percent, and possibly 2.0 percent next year, up from 1.8 percent.
In 2008, a property crash plunged the eurozone's fourth-biggest economy into five years of economic and financial turmoil.
Spain faced pressure to seek a full financial bailout from the eurozone in 2012. In the end it received 41 billion euros ($55 billion) to rescue its banks.
Spain technically exited its second recession in five years in mid-2013.
The Spanish economy expanded by a better-than-expected 0.6 percent, up from growth of 0.4 percent in the first quarter, with the government crediting its reforms to the banking system and labour market for the stronger growth.
But unemployment, while starting to fall, remains sky-high.
The latest unemployment data showed the jobless rate edged below 25.0 percent in April-June for the first time since the third quarter of 2012. But at 24.47 percent, it remains one of the highest in the industrialised world.
Rajoy said his government would in October introduce a package of measures aimed at creating jobs for those over the age of 45 or for workers who have been out of work for a long time.
His cabinet on Friday approved a major reform to lower both corporate tax and income tax for lower earners, which it hopes will boost economic growth.
The new leader of the main opposition Socialist Party, Pedro Sanchez, said the government was out of touch with the financial situation of most Spaniards.
"Please, do not say there is an economic recovery when what we have is the impoverishment of the middle class," he told a news conference.
The first measure Sanchez has pledged to take if his party wins the next general election, slated for 2015, is scrap a labour law reform introduced by Rajoy that makes it cheaper and easier to fire workers.