~50%Spain’s economy grew 3.2% in 2024, one of the fastest in the eurozone, driven by strong domestic demand, robust tourism, and EU recovery funds, Powered by strong household spending, resilient investment and a solid tourism sector, Spain delivered one of the eurozone’s strongest growth performances in 2024.
Comparison with Other Eurozone Economies
Spain’s economic growth in 2024 was the fastest-growing major EU economy in 2024, thanks to its diversified sectors and lower reliance on heavy industry (unlike Germany).
Country
GDP Growth (2024)
Key Factors
Spain
3.2%
Tourism, domestic demand, EU funds
France
1.2%
Weak industrial output, lower consumption
Germany
0.7%
Recession risk, manufacturing slump
Italy
1.5%
Moderate recovery, banking sector strength
Eurozone Avg.
1.5%
Stagnation in Germany weighed on region
Spain was the fastest-growing major EU economy in 2024, thanks to its diversified sectors and lower reliance on heavy industry (unlike Germany).
Spain’s Sector Performance in 2024
Services (+4.1%) – Led by tourism, trade, and transport.
Industry (+2.5%) – Manufacturing and automotive sectors rebounded.
Construction (+3.0%) – Boosted by housing demand and public works
Key Drivers of Spain’s 3.2% Growth in 2024
Tourism & Services Sector (Major Contributor)
Tourist arrivals exceeded pre-pandemic levels, with over 85 million visitors (compared to 83.5 million in 2019).
Contribution to GDP: Tourism accounted for ~12% of Spain’s GDP and supported hospitality, transport, and retail employment.
Top source markets: UK, Germany, France, and a rebound in Asian tourists (especially China).
Strong Domestic Demand
Private consumption grew by ~2.8%, supported by:
Declining inflation (falling to ~3.4% in 2024 from 8.4% in 2022) boosted purchasing power.
Improved consumer confidence due to labour market recovery.
Public consumption also contributed to increased social spending and infrastructure investments.
Investment & EU Recovery Funds
Gross fixed capital formation (investment) grew by ~5%, fueled by:
EU Next Generation funds (Spain received €160+ billion in grants/loans). Spain effectively deployed Next Generation EU funds, boosting public investment in infrastructure, digitalization, and green energy projects.
Green energy & digital transformation projects (e.g., renewable energy expansion, 5G rollout).
Housing market recovery (residential investment up 6%).
Export Growth & Manufacturing Resilience
Exports rose by ~4.5%, led by:
Automotive sector (Spain is the 2nd largest car producer in Europe).
Foreign Direct Investment (FDI) remained strong, particularly in tech and renewable energy.
Challenges Ahead for Spanish Economy
Despite Spain’s economy growing at 3.2%, it faces several structural and cyclical challenges that could impact its growth trajectory in the coming years.
Persistent Inflation & High Interest Rates
Core inflation remains sticky (around 2.6% in February 2025), driven by services and food prices.
Mortgage strain: Many Spanish households have variable-rate mortgages, making them vulnerable to rate hikes.
Labor Market Weaknesses
High structural unemployment (~10.6%), with youth unemployment still at 24.90%, the highest among EU members and significantly above the EU average of 14.6%
Temporary contracts (around 20% of workers) create job insecurity and lower productivity.
Skills mismatch: Growing tech and green sectors struggle to find qualified workers.
Public Debt & Fiscal Pressures
Public debt (~107% of GDP) remains elevated, limiting stimulus options.
Pension costs are rising due to an ageing population (over 20% of Spain’s budget goes to pensions).
EU fiscal rules returning in 2025 could force spending cuts.
Productivity & Competitiveness Issues
Low R&D investment (only 1.4% of GDP vs. EU average of2.2%).
SME-dominated economy: Many small firms lack digitalization and scalability.
Bureaucracy slows business formation and foreign investment.
Energy Dependence & Climate Transition Costs
Despite progress in renewables (wind & solar now account for ~50% of electricity mix), Spain still imports ~70% of its fossil fuels.
High energy transition costs: Industries (e.g., steel and cement) face expensive decarbonization.
