The Spanish economy will grow 1 percent this year and 1.5 percent in 2015, according to the latest forecast from U.S. investment bank Morgan Stanley.

The bank earlier projected Spain's GDP would expand by 0.6 percent in 2014 and by 1.2 percent next year.

Morgan Stanley attributes the more optimistic forecast to increasingly favorable financing conditions and an improved outlook for leading European countries.

Economists at the U.S. bank expect Spain to enjoy healthier domestic demand over the next two years.

Spain's progress could surpass that of most eurozone countries except Germany, since Spanish exports are expected to maintain one of the highest growth rates in the region, the report said.

Spain's export sector has become more competitive thanks to a decline in unitary labor costs, Morgan Stanley said.

At the same time a stabilization of the job market is taking place, which augurs "a modest" net job gain of 0.2 percent this year, the bank said.

Morgan Stanley's growth forecast coincides with that of Bank of Spain Gov. Luis Maria Linde. EFE