“A decade after the country was written off as a basket case,” said The Times, Spain is enjoying “a new age of prosperity”.
It’s been named by The Economist as the world’s best-performing rich economy. Spain’s GDP expanded by 3.5% in the last quarter of 2024, “outstripping official forecasts and far outperforming its eurozone peers”, said Reuters.
By contrast, the UK economy grew by just 1.7% over the same period, with France recording 1%, Italy 0.6%, and Germany only managing 0.1%.
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What is driving Spain’s growth?
Key to Spain’s economic resurgence has been “the government’s strikingly different approach to migration”, said The Guardian.
Unlike his fellow leaders in France, Germany, Italy and Britain, Spain’s Prime Minister Pedro Sánchez has extolled the virtues of a liberal immigration policy, telling his country’s parliament in October that the choice was “between being an open and prosperous country or a closed-off, poor country”. As Spain has one of the lowest birth rates in the EU, only immigration could grow the economy and sustain the welfare state, he said – and so it has proved.
Spain’s “strong export figures” and “robust consumption” have only been possible because of “the health of the country’s labour market”, said Euronews.
Of the 468,000 jobs created last year, only 59,000 were taken by Spanish nationals, according to the country’s National Statistics Institute Active Population Survey. Migrants “plugging gaps in the labour market” have helped Spain’s unemployment levels fall to their lowest level since the 2008 financial crisis, said The Guardian.
At the same time, record tourism – 94 million people visited Spain in 2024 – has helped fuel GDP growth and “represents about 13% of the economy”, said The Times.
Other factors behind Spain’s boom include its “abundance of wind and solar renewables”, which have “helped to keep energy relatively cheap while EU Covid recovery funds bolstered the economy”, said The Guardian. The socialist-led government also “ran a deficit to fund initiatives, such as raising pensions and public sector hiring”.
“If you get this combination, it’s hard to beat,” Javier Díaz-Giménez, a professor of economics at Barcelona’s IESE Business School, told the paper.
Will the Spanish boom last?
While the European Commission is forecasting that “Spain will continue to lead growth among the bloc’s big economies this year”, there are challenges “looming on the horizon”, said the BBC.
The country’s “heavy reliance on tourism” has led to a “growing backlash against the industry by local people”. There have been a series of protests by residents in urban and coastal tourist areas, who believe holiday flats have pushed up the price of housing.
Public debt stands at over 100% of GDP, while the €140 billion (£116 billion) of EU pandemic recovery funds, which have also been a major driver of growth, will soon be spent.
And, although unemployment has fallen overall, youth unemployment is above 26% – the highest rate in the EU. “This is the most worrisome part of the Spanish economy,” Jordi Gual, former chairman of CaixaBank, told The Times.
Sánchez leads a minority government in a “deeply polarised political landscape”, so tackling these problems is “difficult”, said the BBC. But, while it attempts to do so, “Spain is enjoying its status as the motor of European growth”.
