Spain’s economy has experienced a remarkable resurgence, outpacing its peers in the eurozone with a growth rate of 3.2% last year. The country’s balanced model of growth, driven by tourism and investments in sustainable sectors, has positioned it as the motor of European economic expansion.
Tourism plays a significant role in Spain‘s economy, with the country receiving a record 94 million visitors in 2024. This post-Covid expansion is a major reason why the eurozone‘s fourth-biggest economy has been easily outgrowing its peers, including Germany, France, Italy, and the United Kingdom. The tourism industry‘s growth has contributed to an increase in GDP of 3.2% last year.
Spain has a diverse economy, driven by services, industry, and agriculture.
The country is the 14th-largest economy in the world by nominal GDP, with a GDP per capita of $35,000 (2020 est.).
Tourism is a significant contributor to the economy, accounting for around 12% of GDP.
Key sectors include automotive manufacturing, pharmaceuticals, and renewable energy.
Spain's economic growth has been impacted by the European sovereign-debt crisis, but it has since recovered.
The Spanish model is successful because it is a balanced model, guaranteeing the sustainability of growth. Carlos Cuerpo, the business minister in the Socialist-led coalition government, points out that Spain was responsible for 40% of eurozone growth last year. The country’s economy is being modernized through post-pandemic recovery funds from the EU’s Next Generation programme, which will provide up to €163bn by 2026.
Spain is investing the money in various sectors, including the national rail system, low-emissions zones in towns and cities, and the electric vehicle industry. These investments are expected to spur growth and create jobs. “public spending has been high and is responsible for approximately half of the country’s growth since the pandemic,” María Jesús Valdemoros, a lecturer in economics at Spain’s IESE Business School, notes.
Since Covid, the other major economic challenge for Spain has been the cost-of-living crisis triggered by supply-chain bottlenecks and the Russian invasion of Ukraine in 2022. Inflation peaked at an annual rate of 11% in July of that year, but by the end of 2024 it had fallen back to 2.8%. “subsidies introduced to cut the cost of fuel consumption and encourage public transport use were key in mitigating the impact of energy price rises,” Madrid believes.
Mr Cuerpo argues that measures taken to counter Spain’s traditional vulnerability to economic turmoil have helped the country become more resilient. The country’s green energy output is also seen as a favourable factor, not just in guaranteeing electricity but also spurring investment. “Spain has the second-largest renewable energy infrastructure in the EU,” it is noted.
A longstanding weakness of the economy has been a chronically high jobless rate, which is the biggest in the EU and almost double the block’s average. However, the situation did improve in the last quarter of 2024, when the Spanish jobless unemployment rate declined to 10.6%, its lowest level since 2008.
The European Commission has forecast that “Spain will continue to lead growth among the bloc’s big economies this year and remain ahead of the EU average,” however challenges are looming on the horizon, including a growing backlash against tourism and a housing crisis. With an uncertain and deeply polarised political landscape, it is difficult for the minority government to tackle these problems. But, while it attempts to resolve them, “Spain is enjoying its status as the motor of European growth,”
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- www.bbc.co.uk | How Spains economy became the envy of Europe BBC News
