Only three countries in the eurozone experienced better growth than Spain in 2024: Cyprus, Croatia, and Malta. Reflecting the positive momentum in southern Europe, the resilience of the service sector is providing particular support to the economy. 

Thank you, neighbors!

The country has taken full advantage of the post-COVID tourism boom, which now accounts for 14% of GDP. Indeed, Croatia, Cyprus, and Malta are amongst European Union countries with the highest share. Spain is hot on the heels of France in its bid to become the world's largest tourist destination, with 94 million visitors expected in 2024 (compared to 100 million for France).

You can therefore imagine that Spain suffered particularly badly from the 2020 pandemic. It is the European bloc country whose economy declined the most at the time, slumping almost 11%. After Italy, Spain was the main beneficiary of the European "Next Generation" plan, with €163bn to be injected into its economy. 70% of the sum has already been disbursed and, despite criticism from some regarding the nature of the spending, CNBC estimates an impact of 1.2 to 1.7% on Spanish GDP in 2024. 

Green suits La Roja

Spain has also made headway in renewable energy. Wind and solar power now account for over 40% of Spain's electricity production, almost double the figure in 2018. A report by Caixa Bank Research indicates that if their share had remained at the levels of that time, wholesale prices would now be 40% higher. 

This policy is attracting investors, as in 2024, FDI (foreign direct investment) fell by 4% in the EU, while Spain recorded a 15% increase in value, moving it up to fourth place in the rankings. 

Immigration as a solution?

Immigration must also be mentioned as a factor in growth. This trend is accelerating due to the economic and political conditions in certain South American countries and tougher conditions for entry into the United States. Spain now welcomes proportionally more new arrivals than France, Italy, or Germany. But above all, their level of education is higher than that of immigrants from neighboring countries, according to Goldman Sachs. This is a welcome opportunity in a country where deaths have outnumbered births since 2015.

Spain is also less exposed than other European powers to international uncertainties. Less dependent on exports, it has been more resilient to rising energy costs, industrial tensions with China and US tariff threats. This advantage has undoubtedly spared Pedro Sanchez many sleepless nights, compared to his German counterpart Friedrich Merz.

But the picture is not without its dark spots. Wages are struggling to keep pace with the cost of living and the political scene remains highly fragmented, with no stable majority in Parliament. Accusations of corruption have also weakened the image of the Socialist Party. And while unemployment is at its lowest since 2008, it still exceeds 10%, well above the European average. Productivity and investment in R&D also remain below continental averages.