Spain's economy expanded by 3.2% last year, propelled by strong exports, tourism boom and robust consumer spending, making it one of the fastest-growing developed nations, official data showed on Wednesday.
Spain outstripped official forecasts and far outperformed its eurozone peers, with the data published by the National Statistics Institute confirming its standout performance with 0.8% growth in the final three months of 2024, the same pace as the quarter before.
The latest figures are a "reason for everyone to be proud, even more so in this uncertain context," Economy Minister Carlos Cuerpo said on Wednesday.
Growth should remain robust this year and next thanks to consumer spending, boosted by falling unemployment, and investment, brokerage Jefferies said in a note to investors.
Wednesday's result slightly exceeded forecasts of 3.1% growth by the Bank of Spain and the International Monetary Fund (IMF) and progressed from an expansion of 2.7% in 2023. The government projected a 2.7% growth.
"Spain keeps leading the eurozone growth, with a GDP increase four times higher than the eurozone as a whole," Cuerpo said in a statement.
He said this week the government would raise its forecast for this year from the current 2.4% following the annual data, which was also buoyed by a strong agriculture industry.
Exports in the European Union's fourth-largest economy grew 3% year-over-year in the final quarter of 2024 and household consumption increased 3.7%.
The service sector continued to perform strongly from October to December, with a jump of 3.9% year-over-year.
Tourism, which represents around 13% of the economy, has driven the sector which has flourished after the COVID-19 crisis paralysed 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%, and the IMF predicts the country will expand faster than other advanced economies, including Germany, Japan, France, Britain and Italy.
In contrast, the European Central Bank (ECB) has predicted a modest 0.8% growth in 2024 for the eurozone, weighed down by the woes of Europe's biggest economy Germany.
Recently, both France and Germany lowered their growth outlooks for this year to 0.9% and 0.3%, respectively, while Italy expects a 1.2% expansion. All three are due to release GDP data on Thursday.
Additionally, Spain's fiscal situation is better than its peers', Jefferies said, and it is less likely to suffer from U.S. President Donald Trump's plans to impose trade tariffs.
Unemployment in Spain also fell to 10.61% at the end of 2024, its lowest level since the 2008 financial crisis.
The bullish economy has provided political capital to the minority left-wing government which struggles to pass legislation.
Still, the rising cost of living and a housing crisis that has pushed prices through the roof in big cities has dented living standards despite the growth, head of strategy at Renta 4 brokerage Natalia Aguirre told Reuters, forecasting a slowdown in private consumption.
Analysts also point to Spain's below-par GDP per capita in Western Europe and its snail-paced growth that clocked just about 4% since 2007.
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% this year," he wrote in a note.
But 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 Agence France-Presse (AFP).
The budget deficit is set to fall this year and next thanks to higher taxes and cuts in subsidies such as the one on electricity. Spain expects to reduce its budget deficit to 2.5% this year.
