The economy of Spain has shown significant growth over the past year, confirming a robust recovery post-pandemic. According to the National Institute of Statistics (INE), the Spanish economy expanded by 3.2% in 2024, outperforming most major economies in the Eurozone. This growth was driven primarily by strong domestic demand and a robust labor market, despite challenges from the broader European economic context.
Spain led the Eurozone in growth for the year, contributing nearly half of the total growth in the region, which recorded a more modest average increase of 0.9%. In 2024, Spain accounted for about 50% of the total Eurozone growth, highlighting its economic resilience and potential.
The INE's latest figures also showed that during the fourth quarter of 2024, Spain's GDP grew by 0.8%, a consistent performance that mirrored the previous quarters of the year. Notably, domestic consumption contributed significantly to the GDP growth, with households increasing their expenditures by 1% while government spending added a further 0.3%. Investment also played a critical role, rising by 3.5% towards the end of 2024.
Economist Carlos Cuerpo emphasized the importance of these results, stating, "The data demonstrates that Spain maintains a balanced, sustainable, and robust growth trajectory, capable of generating quality employment and improving the purchasing power of families, which is especially relevant in the context of international uncertainties." This underscores the effort to build an economy that is not only growing but also equitable.
In terms of labor market performance, the Spanish economy added approximately 500,000 new jobs in the past year, reflecting the vibrancy of the workforce and increased demand from various sectors. Wages also saw a significant increase, with average remuneration rising around 5% year-on-year.
While the numbers appear promising, experts have cautioned about underlying imbalances within the economy. The growth in the Spanish economy has been partially fueled by increased public spending and significant immigration, which accounted for 42% of the new jobs created in 2024. In a recent report, ESADE, a leading business school, revised GDP growth prospects downward, suggesting that Spain’s growth rate will slow to 1.9% by 2026 and 1.7% by 2027, urging the government to implement necessary reforms to improve national competitiveness and productivity.
Challenges still lie ahead. The external demand contribution to the GDP was notably lower than previous years, only adding 0.3 points to the growth amid reduced demand from other Eurozone countries. This suggests that while Spain robustly drives its local economy, it remains vulnerable to external shocks from the global economy.
Despite these concerns, the continued investment growth and recovering domestic consumption indicate a positive outlook. The retail sector and services, especially tourism, played vital roles in maintaining economic momentum. The influx of European tourists boosted services, supporting export figures despite a softening performance in the manufacturing sector.
Carrying the momentum into 2025, the optimistic growth in Spain serves as a beacon compared to the stagnant or contracting economies of its neighbors, with five other Eurozone countries facing recession. Policymakers are hopeful that strategic reforms in housing, labor, and business investment can sustain this growth trajectory amidst uncertain global conditions.
In conclusion, while the economic data for 2024 places Spain at a pivotal point in its recovery, the need for structural reforms remains critical. Addressing issues like housing affordability and unemployment, particularly among youth, could determine how effectively Spain can navigate future economic challenges.
