Madrid, Jun 21 (IANS/EFE): The Spanish economy is expected to start growing in the third quarter of this year as "the worst phase of the second recession is left behind", Bank of Spain Gov. Luis Maria Linde said Thursday.

Linde spoke during the presentation to parliament of the Bank of Spain's annual report for 2012, which saw the biggest drop in the gross domestic product occur in the last few months.

"The latest figures point to an easing in the contraction of the GDP," Linde said, adding that there would be "positive growth rates" between July and September.

The central bank chief also discussed the recent decision by the European Commission to give Spain more flexibility in achieving its deficit target of 6.5 percent of GDP in 2013 and 5.8 percent of GDP in 2014.

"We are on an adequate track for the recovery of (economic) activity," Linde said.

Spain's economy has "solid foundations" for creating jobs and growing, but this will only be ahieved if the reform policies remain in place, the central bank governor said.

The latest projections call for current account surpluses in 2013, 2014 and "subsequent years", Linde said.

Spain, however, must achieve additional improvements in competitiveness and efficiency in the markets for goods and services that "help contain costs, margins and prices", Linde said.

Spain has been mired in a deep recession since 2008 due to the financial crisis caused by the bursting of the real estate bubble.