Spain has been named the world's best-performing rich economy by The Economist. "A decade after the country was written off as a basket case," the country is enjoying a "new age of prosperity," said The Times. Its GDP expanded by 3.5% in the last quarter of 2024, "outstripping official forecasts and far outperforming its eurozone peers," said Reuters. By contrast, over the same period, the U.K. economy grew by just 1.7%, France recorded 1% growth, Italy grew by only 0.6%, and Germany managed 0.1%.
What's driving growth? Key to Spain's economic resurgence has been the government's "strikingly different approach to migration," said The Guardian. Unlike his fellow leaders in France, Germany, Italy and the U.K., Spanish Prime Minister Pedro Sánchez has extolled the virtues of a liberal immigration policy, telling his country's parliament in October that the choice was "between being an open and prosperous country or a closed-off, poor country."
Spain's "strong export figures" and "robust consumption" have only been possible because of the "health of the country's labor market," boosted by migrants, said Euronews. Of the 468,000 jobs created last year, only 59,000 were taken by Spanish nationals, according to the country's National Statistics Institute Active Population Survey.
What about tourism? At the same time, record tourism — 94 million people visited Spain last year — has helped fuel GDP growth and "represents about 13% of the economy," said The Times. Other factors behind Spain's boom include its "abundance of wind and solar renewables," which have "helped to keep energy relatively cheap while EU Covid recovery funds bolstered the economy," said The Guardian. The socialist-led government also "ran a deficit to fund initiatives, such as raising pensions and public sector hiring."
Will the boom last? The country's "heavy reliance on tourism" has led to a "growing backlash against the industry by local people." There have been a series of protests by residents in urban and coastal tourist areas who believe holiday rentals and homes have pushed up the price of housing.
And although unemployment has fallen overall, youth unemployment is above 26%, the highest rate in the EU. This is the "most worrisome part of the Spanish economy," Jordi Gual, a former chairman of CaixaBank, said to The Times. |