Spain’s economy is hitting on all cylinders – and then some. GDP experts are currently predicting a gaudy 2.5% growth in gross domestic product (GDP) this year. Spain’s finance minister Carlos Cuerpo recently described the nation as a “great outlier” in terms of economic growth. He is keen, too, to point to the extraordinary pluralism of its landscape. A few key things are behind this strong performance. A post-pandemic bounce, a booming tourism industry and record-high foreign investment are the three main catalysts.
Tourism, a cornerstone of Spain’s economy, represents approximately 12% of the nation’s GDP. The sector has bounced back more than anywhere else since the pandemic, luring global travelers to a place that offers something for everyone. Spain’s competitive pricing is fueling a boom in demand. That makes it a tremendous magnet for both international travelers and investors.
Spain’s recovery has picked up steam largely due to its position as the second-largest beneficiary of pandemic recovery support from the European Union. Italy has been the largest recipient of this aid. In addition, the EU’s Next Generation EU funds have helped make €163 billion available to Spain—mostly through grants rather than loans. These funds have allowed for making unprecedented investments in infrastructure and services – supporting Spain’s economy while emerging from the COVID-19 crisis.
The unemployment rate is down to 8.5 percent, as Spain’s labor market has roared back to life. As of 2024, that workforce has expanded to just shy of 3 million—an astounding 9.7% increase over 2023. Notably, Spain boasts the highest youth employment rate in the European Union, which reflects a commitment to integrating younger generations into the economy. Immigration is the primary driver of this growth, by a large margin. Since 2021, immigrants have accounted for 90% of Spain’s net job growth.
As someone involved in global labor movement initiatives, Cuerpo recognizes that the dynamic has shifted now as the impetus comes from Latin America.
“Latin American economies, some of them are not doing relatively well, so there is this push factor,” – Cardoso
Spain plans to receive almost one million newcomers over the next three years. This new blood will enter via employment-based work visa programs and residence permits, expanding the nation’s domestic work force.
Low energy costs have provided a support to the country’s economic resiliency. The deepening European energy crisis has had a more muted effect on the economy. According to Cuerpo, nowadays Spain’s electricity production is more focused on renewable energies. This change has dramatically reduced wholesale electricity prices.
“The increase in the renewable share in the electricity mix over the past five, six years has implied a drop of 40% in wholesale electricity prices,” – Carlos Cuerpo
Spain’s commitment to renewables allows them to keep long-term energy costs low. It sets the country up as a leader in best practices for sustainable energy development. According to top European clean-tech experts, Spain is one of the top places in Europe for the development of photovoltaic (PV) solar energy.
“Spain is probably the location in Europe where the most PV has been done,” – Pedro Magalhaes
Foreign investments add considerable cultural and economic value to the district. The United States is the number-one foreign investor in Spain. She highlights that interest is coming from China, with a specific focus on areas connected to renewable energy and sustainable mobility.
“When you look at where does that investment come from, the largest investor in Spain is U.S.,” – Cuerpo”But we’re also attracting investment from other parts of the world, including China, on specific sectors related to renewables, to sustainable mobility as well,” – Cuerpo
This wave of investment is matched by a diversifying economy that goes far beyond the tourism industry. It has large exports in non-tourism services, like IT and financial services and professional accountability services.
“It’s not just tourism, it’s also non-tourism services. We’re exporting more in terms of services… than we’re exporting in terms of tourism,” – Cuerpo
The change and diversity of Spain’s economy is a testament to the state’s ability to adjust and succeed even in the face of worldwide headwinds.