Spain’s economic system grew 3.2% in 2024, one of many quickest within the eurozone, pushed by robust home demand, strong tourism, and EU restoration funds, outperforming Germany, France and Italy. Economists say Spain stays a ‘vibrant spot’ in Europe, anticipating this outperformance to proceed by 2025.
Powered by robust family spending, resilient funding and a tourism sector exhibiting no indicators of fatigue, Spain delivered one of many eurozone’s strongest progress performances in 2024, outshining bigger economies and ushering in a brand new period of financial dynamism for Madrid.
Spain’s gross home product expanded by 0.8% on quarterly foundation throughout the fourth quarter of 2024, in response to the ultimate studying launched by the Spanish statistics company INE on Wednesday.
For the complete yr, the Spanish economic system grew by 3.2%, greater than double the eurozone common of 0.9%.
Amongst eurozone international locations, solely Malta (6%), Croatia (3.8%) and Cyprus (3.4%) delivered stronger outcomes. In sharp distinction, Germany’s economic system contracted by 0.2%, whereas France and Italy managed tepid progress of 1.1% and 0.7%, respectively.
The outperformance of Spain is a consequence of each structural shifts and cyclical tailwinds.
Economists spotlight the mixture of resilient family spending, strong tourism exercise, and efficient deployment of European restoration funds because the core engines fuelling Madrid’s financial energy.
What’s driving Spain’s progress?
Home demand has been the primary pillar of growth.
In 2024, it added 3.6 proportion factors to annual GDP progress, whereas exterior demand subtracted 0.2 factors.
Family consumption elevated by 1%, public expenditure by 0.3%, and funding by 2.9%. Against this, web commerce was a drag, as imports (+1.4%) outpaced sluggish exports (+0.1%).
Throughout sectors, all main industries—besides major actions—posted positive aspects. Building grew by 2.7%, providers by 1.0%, and trade by 0.3%, pushed by manufacturing’s 0.5% progress. Major sectors declined by 0.7% after a short lived rebound within the earlier quarter.
Tourism reveals no indicators of fatigue
Tourism, a cornerstone of the Spanish economic system, stays a robust progress engine.
In accordance with Judit Montoriol Garriga, economist at CaixaBank Analysis, Spain welcomed an estimated 94 million worldwide vacationers in 2024—a ten% rise from the earlier yr.
“The sector has been exhibiting no indicators of cyclical exhaustion and it recorded robust progress in 2024,” Garriga mentioned.
Tourism GDP is predicted to rise by 3.6% in actual phrases in 2025, she mentioned, lifting the sector’s share within the total economic system to 13.2%, from 12.9% in 2024.
The sector’s efficiency is especially vital given its broad spillover results throughout retail, hospitality, and transport providers.
Can Spain hold outperforming in 2025?
Whereas a moderation in progress is anticipated, Spain remains to be anticipated to stay among the many eurozone’s prime performers in 2025.
The Organisation for Financial Co-operation and Improvement (OECD) initiatives a 2.6% GDP improve for Spain, up 0.3 proportion factors from its December 2024 estimate.
By comparability, Germany, France and Italy are forecast to develop by 0.4%, 0.8%, and 0.7%, respectively. The broader eurozone is predicted to increase by simply 1%.
Montoriol Garriga at CaixaBank expects Spanish progress of two.5% this yr, pushed largely by home demand, amid declining rates of interest, rising family buying energy, and continued deployment of EU restoration funds.
BBVA’s newest financial outlook reinforces this narrative, stating that “the stronger efficiency of peripheral economies—significantly Portugal and Spain—versus core eurozone international locations will arguably be confirmed in 2025.”
BNP Paribas economist Lucie Barette mentioned that “family consumption in Spain ought to stay the primary driver of progress within the first quarter and throughout the yr as a complete”.
She cited retail gross sales volumes rising by 2.2% year-on-year in January and new automobile registrations up 8.2% over January and February.
Inflation, in the meantime, stays contained.
Harmonised shopper costs rose 2.9% year-on-year in February. Core inflation, which excludes risky power and meals objects, eased to 2.1%, inching nearer to the European Central Financial institution’s 2% goal. Nevertheless, Barette famous the danger that rising producer costs could move by to shoppers in coming months.
Spain’s producer costs jumped 6.6% year-on-year in February 2025, the quickest tempo since February 2023 and a pointy acceleration from the two.6% improve recorded in January.
Restoration plan nonetheless fuelling progress
The continued deployment of NextGenerationEU (NGEU) funds underneath Spain’s Restoration, Transformation and Resilience Plan is one other engine of progress.
As of end-2024, tenders and grants totalling €47.6 billion had been awarded—roughly 60% of the overall grant envelope. Of this, €14.4bn was executed in 2024 alone.
Spain has already obtained €47.9bn in grants from the European Fee. A fifth disbursement request—comprising €8bn in grants and €15.9bn in loans—was submitted in December.
A Financial institution of Spain survey reveals the significance of this stimulus: 45% of companies mentioned they’d not have made their investments with out NGEU help, and 31% would have applied solely a part of them.
Actual property and lending stay buoyant
Spain’s housing market confirmed indicators of energy all through 2024.
Residence costs, based mostly on appraisal values (MIVAU), rose by 5.8% final yr and are anticipated to develop by 5.9% in 2025. Transaction costs (INE index) climbed by 8.4% in 2024 and are forecast to rise by 7.2% this yr.
The lending cycle can be gaining momentum. January 2025 information reveals new credit score volumes accelerating, pushed by elevated financial exercise and confidence within the restoration.
Labour market stays tight
The labour market continued to increase, with complete hours labored rising 2.8% year-on-year within the fourth quarter and full-time equal employment up 2.3%.
Spain’s unemployment charge dropped to 10.61% within the fourth quarter of 2024, down from 11.21% within the earlier quarter, reaching its lowest degree because the second quarter of 2008.
The OECD mentioned that unemployment stays low in comparison with pre-COVID ranges in southern European international locations, significantly in Spain and Italy.
Trying forward: Extra positive aspects, however slower tempo
Though the Spanish economic system is more likely to decelerate from 2024’s distinctive tempo, all indicators counsel it is going to stay one of many eurozone’s outperformers within the coming years. The OECD expects 2.1% progress in 2026—practically double the charges anticipated in Germany, France and Italy.
With a resilient shopper, a booming tourism trade, and public funding nonetheless flowing from European funds, Spain’s post-pandemic restoration story seems removed from over.