How Spain Has Become the Envy of Europe: An Economic Powerhouse Still Rising
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Loading... - Martina Biondi
- 12 Feb 2025
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Spain is currently experiencing a remarkable economic resurgence, positioning itself as one of the most dynamic economies in Europe. Once feared to be severely impacted by the COVID-19 pandemic, particularly in its vital tourism sector, Spain has not only recovered but is now thriving, leaving other European nations envious of its progress.
In 2024, Spain welcomed a record 94 million visitors, closely trailing France's 100 million. This resurgence in tourism, which many believed would never return to pre-pandemic levels, has been pivotal in driving economic growth. Spain is shifting its focus from budget tourism to high-end experiences, capitalizing on its rich cultural offerings, including famous tapas and sangria. This strategic pivot has contributed to a 3.2% increase in GDP last year, significantly outpacing the growth rates of Germany (-0.2%), France (1.1%), Italy (0.5%), and the UK (0.9%).
Spain has been recognized by The Economist as the world’s best-performing economy, a title that reflects its balanced economic model. While tourism remains a cornerstone, other sectors such as financial services, technology, and specialized industries are also thriving, collectively driving 40% of eurozone growth. The influx of up to €163 billion in EU post-pandemic recovery funds by 2026 is set to further enhance Spain's economic landscape, facilitating investments in green energy, transportation infrastructure, and the electric vehicle sector.
Unlike other major European economies grappling with high energy costs and industrial challenges, Spain's service-oriented economy has shown remarkable resilience. The so-called “Iberian exception” allowed Spain and Portugal to cap gas prices for electricity, providing a buffer against the energy crisis. This strategic move has helped shield residents from the worst impacts of rising energy costs.
As Europe’s second-largest car producer, Spain is making significant strides in electric vehicle production. Recognizing the importance of sustainable energy, Spain is the EU’s second-largest generator of renewable energy. With abundant sunshine and wind resources, the country is well-positioned to lead in green energy initiatives, attracting investors eager to capitalize on its renewable infrastructure.
Historically plagued by high unemployment rates, Spain has seen a positive shift, with jobless numbers dropping to 10.6% at the end of 2024—the lowest in over 15 years. This improvement is attributed to radical labor reforms aimed at reducing the reliance on temporary contracts and promoting more stable employment. Additionally, immigration remains a contentious issue, but Prime Minister Pedro Sánchez emphasizes the importance of newcomers in sustaining economic growth, particularly in an aging society with one of the world’s longest life expectancies.
