Spain’s Economic Growth in 2024

By Inti Landauro and Marta Serafinko

MADRID (Reuters) – Spain’s economy expanded by 3.2% in 2024, surpassing official forecasts and significantly outperforming its euro zone peers, as reported by the National Statistics Institute on Wednesday.

The Spanish government plans to increase its growth forecast for 2024 from 2.4% due to the unexpected performance, driven by a surge in tourism, strong agricultural output, and rising exports.

Economic Outlook
Growth is expected to remain strong in the upcoming year, supported by increased consumer spending fueled by declining unemployment rates and higher investment activity, according to Jefferies brokerage.

Factors Contributing to Growth
– Immigration has played a vital role by filling skill shortages and reducing the unemployment rate to its lowest in 16 years in Q4.
– Private consumption, record tourism figures, and robust job creation, especially through immigration, are key drivers, according to Javier Molina, Senior Analyst for eToro.

Challenges Ahead
Despite growth, rising living costs and a housing crisis are impacting living standards, prompting Natalia Aguirre from Renta 4 brokerage to predict a slowdown in consumer spending. Slow growth in neighboring countries could also dampen Spanish exports, cautioned Molina, highlighting that European economic stagnation might affect Spain in 2025.

In the last quarter, Spain’s economy grew 0.8% compared to the previous quarter, exceeding analysts’ expectations of 0.6% growth.

The full-year growth rate outpaced both the government’s initial 2.7% prediction and the Central Bank’s 3.1% forecast. Carlos Cuerpo, Economy Minister, noted that Spain’s GDP growth is outstripping the euro zone overall.

As France, Germany, and Italy lower their growth forecasts, Spain maintains a stronger fiscal position. The budget deficit is projected to decrease this year and the next, with plans for tax increases and subsidy cuts, including on electricity, aiming to reduce the deficit to 2.5% in 2024.