MADRID--Spain's economic growth accelerated in the fourth quarter as consumer spending bounced despite deepening deflation, statistics institute INE said Friday.

The eurozone's fourth-largest economy grew 0.7% in the three months to December compared with the previous quarter, INE said. That equated to an annual pace of growth of 2%, INE added. In the third quarter, Spain's economy grew 0.5% from the second quarter.

The INE estimates beat expectations. Last month, the Bank of Spain said the economy likely grew 0.6% in the fourth quarter from the third.

For the whole of 2014, Spain's economy grew 1.4%--the first year in which there has been full-year economic growth since 2008. In 2013, gross domestic product contracted 1.2%.

Spain's economy has picked up faster than anticipated since emerging a year ago from a six-year slump in which GDP shrank by 15% between 2008 and 2013, according to World Bank estimates--significantly less than the 30% contraction recorded in Greece but among the worst performances of any major developed economy.

Write to David Román at david.roman@wsj.com

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