In 2024, its forecast 3% growth set a pace almost four times faster than its European neighbours! The country has been in the headlines recently by being named the best economy of 2024 in the annual rankings from The Economist.
This remarkable recovery following the pandemic has created 1.8 million new jobs since 2019, demonstrating outstanding labour market strength. By the end of 2024, more than 21.3 million people were employed in the country, the highest number in history, according to data from Spain’s Ministerio de Empleo y Seguridad Social.
The financial world is taking notice too - for the first time since 2007, investors actually consider Spanish government bonds safer than French ones.
The Madrid Stock Exchange
What's driving the success?
Spain is the biggest recipient after Italy to benefit from the EU’s Next Generation recovery funds (The European Union’s post-pandemic aid scheme).
Strong immigration flows driving workforce growth–lots of new people are moving to Spain, bringing fresh talent and energy.
Resurgent tourism sector, with more and more people choosing Spain as a top destination, not just to visit but to live and work in.
Expanding service exports, with tech companies and consulting firms growing rapidly.
Increased public investment.
Looking ahead
The future looks bright. While growth might slow down slightly (to 2.3% in 2025 and 2.1% in 2026), it's still expected to be among the strongest in Europe. People are spending more, businesses are investing, and more jobs are being created. CaixaBank Research published an article at the end of last year that stated: “For 2025, we expect the economy to moderate its growth rate slightly to 2.3%. This is nevertheless a high rate and well above the 1.3% expected for the euro area.”… “we also expect an average net creation of over 400,000 jobs in 2025, and a slight fall in the unemployment rate, elements that will allow more wealth to be created and will bolster household consumption.”
Tourism tops
Despite the ongoing protests in tourism hotspots and global concern over the climate crisis, the warmer temperatures have extended Spain's summer season. In October, more than 8.9 million visitors (an increase of 9.5 percent from 2023) contributed €11.898 billion to the economy (up 15.5 percent).
Tourism: more and more people are choosing to visit Spain
Good news for workers
The unemployment rate is set to decline from 11.5% in 2024 to 10.7% by 2026, while wages are outpacing inflation, which means people have more spending power.
What about inflation?
Prices are settling down. Inflation is expected to drop from 2.8% in 2024 to 2.0% by 2026, mainly due to food and energy prices cooling off. Though some prices, like those for hotels and transportation, are taking longer to come down, the overall trend is positive.
The bottom line
Spain has turned into Europe's economic success story. While there are still challenges ahead, the country has built a stronger, more diverse economy that's creating jobs, attracting investment, and showing impressive growth. It's not just about tourism anymore - Spain is becoming a modern, dynamic economy that's setting an example for the rest of Europe.
