Why does Spain’s economy do so well

Spain’s thriving economy is ahead of its European neighbors as tourism, foreign investment and immigration help to grow fuels.

The South European State is still Growing growth The euro area with an annual gross domestic product is projected to grow by 2.5% this year, while the economies of France, Germany and Italy are projected to expand 0.6%, 0% and 0.7% accordingly.

Spain’s GDP exceeded expectations in the second quarter, growing by 0.7%over Reuters’ estimate of 0.6%. The growth was also higher than the previous three months, which was equal by 0.6%, according to data from the Spanish National Institute of Statistics (INE).

“For the second consecutive year, we will be the advanced number one economy in terms of GDP growth,” Spain Finance Minister Carlos Querpo told CNBC in April.

“Spain is a great outdoor man in terms of growth. It is also a great place to invest,” he added.

The success of the Spanish economy relies on high consumption and investment, as well as tourism, next -generation European funds and immigration.

“This is not only tourism, but also non-tourism services. We export more about services for companies such as IT, accountability services, financial services than we export to tourism-€ 100 billion ($ 116.8 billion) with respect to 94.95 billion (euro in tourism). This is the element of modernization.

Despite this economic growth, several challenges expect Spain, such as maintaining pay in accordance with increasing costs of life, climate change, and more more and more divided And the fact that the country has The highest percentage of youth employment In the EU.

“What will happen to tariffs and international trade, especially in economics like Spain, where exports of goods have increased significantly over the last 15 years?” Cardoso said.

“The second challenge is that the savings percentages remain relatively high. A third source is this low investment rate. Finally, how to reduce government deficit and public debt.”

Still, tourism in Spain represents About 12% from the GDP of the country as it benefits from the pandemic bounce and more expensive prices than other Western European countries.

The success of the sector has caused a return reaction from local communities due to the influx of people visiting historical and popular sites, especially during the peak summer months. Last year, in June, protesters in Barcelona were spotted spraying travelers with water weapons and shouting “Tourists go home.”

The sector can also rely on its growing workforce of nearly 3 million people by 2024, a progression of 9.7% compared to 2023S

Job creation is also supported by high immigration. While other European countries are closing their borders, Spain plans to meet nearly a million migrants over the next three years, through working visa schemes and granting permits for residence of uncompanied workers.

“90% of the increase in the workforce of 2021 comes from immigration,” BBVA chief economist Miguel Cardoso told CNBC.

“This allows the services sector to expand. This keeps companies relatively competitive with regard to the increase in labor costs and allows, for example, allows prices in services to remain relatively contained in a high inflationary environment.”

The year of Las, most people migrating in Spain come from Colombia, Venezuela and Morocco.

“Latin American economies, some of them do not do relatively well, so there is this impetus. There is also the fact that immigration in the United States has become more difficult, so people are turning and seeing alternatives,” Cardoso added.

The Spanish economy was also supported by the next -generation EU funds, which provided 163 billion euros for Spain through grants and loans. The country is the second largest beneficiary of this help to restore the pandemic after Italy.

The Spanish Cuerpo told CNBC that 70% of the grants – 55 billion euros – are already scattered.

“It was a program that was created in part to try to help recover after the pandemic,” Cardoso said.

“Thus, the government prioritizes the investment projects for which they have already had a plan, and therefore they have a relatively low multiplying effect within the economy.”

Nevertheless, the Spanish government aims to use these funds in sectors such as export of non -tourism services, including renewable sources.

The Photovoltaics Arctech tracking company, founded in China in 2009, opened its European headquarters in Madrid in 2024. Photovoltaic cells turn sunlight directly into electricity. This is a growing source of renewable energy that can lead to Lower costs of electricityS

“Spain is probably the location in Europe, where the most PV is made,” EU -General Manager and Na Markets Pedro Magalhas told CNBC.

“The solar ecosystem is indeed here (in Spain), from a junior engineer, all the way to the funds they invest in these major assets.”

Now the company boasts 17 branches outside China and plans to expand in Eastern Europe, as well as plans to diversify into storage solutions.

“Things are happening here. We use the port of Valencia to import and distribute to many places in Europe,” Magalhaes added.

Like Arctech, many foreign companies plan to take advantage of low energy costs in the country.

Automatic giant Stellantis Created with CATL battery manufacturer at the end of 2024, plans To build $ 4.3 billion in lithium -iron phosphate battery in Zagosa, northeastern Spain.

Direct foreign investment in Spain are also strong as the country ranking as the fourth most attractive country in the EU for investors. China alone has announced that it will invest up to 11 billion euros in Spain in 2025 as it is preparing for a record 33 new projects in the country.

“When you look at where this investment comes from, the largest investor in Spain is us,” said Querpo.

“But we also attract investments from other parts of the world, including China, in specific sectors related to renewable energy sources, with sustainable mobility, and this, of course, is always part of our economic security program.”