Tourism demand boosts Spain's economy by 3.2 per cent in 2024
Thanks to foreign and domestic holidaymakers, Spain outpaced several European neighbours like Germany and France
Spain's economy had a fantastic year in 2024, growing by an impressive 3.2% despite the global economic slowdown, particularly in the Eurozone. This robust performance kept Spain at the forefront of the major European economies, outshining powerhouses like Germany and France.
In the final quarter of 2024, from October to December, the economy continued its upward trajectory, growing by 0.8% compared to the previous quarter and a healthy 3.5% compared to the same quarter in 2023.
This boom was driven by a surge in domestic demand, which contributed 2.8 points to the overall growth, a full point more than the previous year.
Unsurprisingly, another one of the key drivers was the booming tourism sector. Spain welcomed a record number of visitors, which kept economic activity strong throughout the year. This influx of holidaymakers not only boosted the hospitality and service sectors but also injected much-needed revenue into the broader economy.
And while most consumers felt that 2024 was a pricey year for things like groceries, electricity and fuel, the data show that households in Spain actually saw their purchasing power increase towards the end of 2024 as inflation eased.
Consumption grew by 1% compared to the previous quarter, outpacing public spending, which increased by just 0.45%. Investment also saw a strong quarter, growing by 2.8% - the fastest pace in three years. This growth was partly due to the deployment of European Next Generation funds and the European Central Bank's (ECB) reduction of interest rates, making financing cheaper for businesses.
Unfortunately, Donald Trump can’t be ignored and between October and December, Spanish exports barely grew by 0.1%, something which many of the experts attribute to uncertainty surrounding the new US president.
Imports, however, increased by 1.3%, pulling more strongly than in the previous quarter.
Most sectors were happy with their results at the end of the year, with the notable exception of the primary sector, which includes agriculture, livestock, mining and fishing. These professionals experienced a 0.7% decline during the last quarter of 2024, a disappointment after regaining 1.5% between July and September.
The industrial sector grew by a modest 0.3%, with manufacturing accelerating to 0.5%. Construction saw a significant boost, with its gross added value increasing by 2.6% compared to the previous quarter. The services sector, while slowing slightly, still managed a 0.9% growth.
There was some good news for employees too as in the last quarter of 2024, wages rose by 7.6% year-on-year, although this is offset slightly by the fact that working hours increased by 2.8%.
What can we expect in 2025 and 2026?
The Ministry of Economy, Trade and Business is optimistic about the future. Carlos Cuerpo, the head of the Ministry, emphasised that the strong economic growth in 2024 positions Spain well to lead the major European economies in the coming years.
In fact, the Ministry plans to revise upwards the growth forecasts for 2025 and 2026 next week. Antonio Garamendi, the president of CEOE, highlighted the “pulling effect” of tourism, noting that both international and domestic tourism played a crucial role in driving the economy.
Image: Freepik
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