Tourists take photos while visiting the Sagrada Familia Basilica in Barcelona on August 2, 2025. (Photo by Manaure Quintero / AFP) (Photo by Manaure Quintero / AFP via Getty Images)
Manaure Quintero | AFP | Getty pictures
Spain’s booming economy exceeds its European neighbors, since tourism, foreign investments and immigration refuel.
The South European country still leads to growth in the euro zone, with the annual gross domestic product increasing to 2.5% this year, while the economy in France, Germany and Italy is forecast by 0.6%, 0% and 0.7%.
The GDP of Spain exceeded expectations and grew by 0.7%in the second quarter, over a Reuters forecast of 0.6%. The growth was also higher than in the past three months, which was 0.6%and showed data from the Spanish National Statistics Institute (INE).
“For the second time in a row, we will be the advanced economy number one with regard to GDP growth,” Spain Minister of Finance Carlos Cuerpo told CNBC in April.
“Spain is now a great outlier in terms of growth. It is also a great place to invest,” he added.
The success of the Spanish economy is based on high consumption and investments as well as on tourism, European funds of the next generation and immigration.
“It is not only tourism, they are also non-tourism services. We export more in relation to services for companies such as IT, obligation to account, financial services than we export in relation to the tourism-100 billion euros [$116.8 billion] Regarding 94.95 billion [euros in tourism]. So that is an element of modernizing the Spanish economy, ”said Cuerpo.
Despite this economic growth, some challenges in Spain await, for example, the payment in accordance with the increasing cost of living, climate change, an ever divided political scene and the fact that the country has the highest employment rate for youth in the EU.
“What will happen with tariffs and international trade, especially in an economy like Spain in which the exports of goods have increased significantly in the past 15 years?” said Cardoso.
“The second challenge is that the savings rates remain relatively high. A third source are these low investment rates. And finally how the state deficit and public debts can be reduced.”
Immigration and tourism boom
However, tourism in Spain corresponds to around 12% of the country GDP, since it benefits from pandemic recreation and cheaper prices compared to other Western European nations.
The success of the sector has triggered the setbacks of local communities about the influx of people who visit historical and popular locations, especially in the main summer months. In June in June, demonstrators were seen in Barcelona as they sprayed travelers with water pistols and called “tourists”.
From 2024, the sector can also count on its growing workforce of almost 3 million people, which is a progress of 9.7% compared to 2023.
The creation of jobs is also supported by a high immigration. While other European countries close their borders, Spain plans to welcome almost a million migrants in the next three years through work viscidants and the granting of residence permits for undocumented employees.
“90% of the increase in the employment population since 2021 has come from immigration,” Miguel Cardoso told BBVA Research to CNBC.
“This enables the service sector to keep companies relatively competitive in order to increase the increase in labor costs, and it enables, for example, to remain relatively in a high inflation environment.”
Most people who hike to Spain came from Colombia, Venezuela and Morocco.
“Latin American economies, some of them do not do it relatively well, so there is this thrust factor. There is also the fact that immigration to the United States has become more difficult and people turn around and see alternatives,” added Cardoso.
The Spanish economy was also strengthened by the EU Fund of the European Union, which has made 163 billion euros available for Spain through grants and loans. According to Italy, the country is the second largest beneficiary of this support for the pandemic recovery.
Spain’s Cuerpo announced CNBC that 70% of the grants – 55 billion euros – were already distributed.
“This was a program that was partially designed to try to support the recovery after pandemic,” said Cardoso.
“So the government prioritized investment projects for which they already had a plan and therefore have a relatively small multiplierffect within the economy.”
Nevertheless, the Spanish government aims to use these funds in sectors such as exports of non-tourism services, including renewable energies.
Low energy costs
Since the investment in Green Energy in the 2000s, Spain has benefited from low energy costs and had less influence on the European energy crisis that followed Russia invasion in Ukraine in 2022.
“The increase in the renewable share of the electricity mix in the past five years has implied a decrease of 40% with the large -scale electricity prices,” said Cuerpo.
Low production costs are an attractive criterion for companies, especially for foreign investors who also deliver the sector.
The photovoltaics tracker company in Madrid, founded in China in China in China in 2009, opened in Madrid in 2024. Photovoltaic cells transform sunlight directly into electricity. It is an burgeoning renewable energy source that can lead to lower electricity costs.
“Spain is probably the location in Europe where most of the PV was carried out,” Pedro Magalhaes, General Manager of Arctech and NA Markets, told CNBC.
“The sun ecosystem is really here [in Spain]From the junior engineer to the funds that invest in these large assets. “
The company now has 17 branches outside China and plans to expand in Eastern Europe as well as plans for diversification of warehouse solutions.
“Things are happening here. We use the port of Valencia to import and distribute at many locations in Europe,” added Magalhaes.
Like Arctech, many foreign companies plan to use the country’s low energy costs.
Author Sternantis Together with the battery manufacturer Catl at the end of 2024, he announced plans for the construction of a 4.3 billion US dollar lithium -iron -phosphate battery system in Zaragoza in northeastern Spain.
Foreign direct investments in Spain are also strong, and the country is the fourth most attractive country in the EU for investors. In China alone, up to 11 billion euros would invest in Spain in 2025, as it is preparing for a record of 33 new projects in the country.
“If you look at where this investment comes from, we are the largest investor in Spain,” said Cuerpo.
“But we also attract investments from other parts of the world, including China, to certain sectors in connection with renewable energies up to sustainable mobility, and of course this is always part of our economic security agenda.”
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