Madrid (AFP) – The Spanish economy expanded 3.2 percent last year, thanks to buoyant exports and consumption that have made it one of the fastest-growing developed countries, official data showed on Wednesday. Spain has been consistently outstripping a mostly sluggish eurozone, and the data published by the National Statistics Institute confirmed its standout performance with 0.8 percent growth in the final three months of 2024. The result slightly exceeded forecasts of 3.1 percent growth by the Bank of Spain and the International Monetary Fund, and progressed from an expansion of 2.7 percent in 2023.
Exports in the European Union’s fourth-largest economy grew three percent year-on-year in the final quarter of 2024, and household consumption increased 3.7 percent. The service sector continued to perform strongly from October to December, with a jump of 3.9 percent year-on-year. Tourism, which represents around 13 percent of the economy, has driven the sector, flourishing after the Covid-19 crisis paralyzed travel. A record 94 million tourists flocked to the world’s second most-visited country last year.
For Juan Carlos Martinez Lazaro, an economics professor at Madrid’s IE University, another “important” factor was population growth supported by immigration, which “sustained domestic demand” with beneficial repercussions for the whole economy. Spain also withstood the impact of its deadliest floods in decades in October that wreaked major damage in the eastern Valencia region, one of its economic motors. The Bank of Spain has raised the 2025 growth forecast to 2.5 percent, and the IMF predicts the country will grow faster than other advanced economies, including Germany, Japan, France, Britain, and Italy. In contrast, the European Central Bank has predicted a modest 0.8 percent growth in 2024 for the eurozone, weighed down by the woes of Europe’s biggest economy, Germany.
Unemployment also fell to 10.61 percent at the end of 2024, its lowest level since the 2008 financial crisis. The bullish economy has provided political capital to the often beleaguered minority left-wing government, which struggles to pass legislation. Economy Minister Carlos Cuerpo told a forum in Madrid that the latest figures were a “reason for everyone to be proud, even more so in this uncertain context”.
The Spanish economy should maintain its rude health in 2025, as a tight labor market sustains high growth in real household income, according to Adrian Prettejohn, an analyst at Capital Economics. “The increase in consumer confidence and loosening of monetary policy should also support consumption growth of close to 4 percent this year,” he wrote in a note. However, the optimism for the future should be tempered by international trade tensions and domestic political instability, which has prevented the government from approving a budget for 2025, Martinez Lazaro told AFP.
© 2024 AFP
