Spain’s economic growth in 2024 emerged stronger than Eurozone

Spain’s economy outperformed other major Eurozone countries in 2024, data from the National Statistics Institute (INE) showed, confirming a contrast with Eurozone peers.

Spain’s gross domestic product grew 3.2 per cent in 2024, a much faster rate than France and Italy’s close-to-1 per cent expansion and Germany’s economic contraction of 0.2 per cent.

Spanish growth sped up in 2024 from 2.7 per cent in 2023, led by sectors related to tourism such as transportation, hotels and retail, as well as manufacturing and agriculture, INE’s quarterly report said.

In the fourth quarter, Spain’s economy grew 0.8 per cent from the previous quarter, INE said, confirming the expectations of analysts polled by Reuters and preliminary data.

On an annual basis, Spain’s fourth-quarter economic output expanded 3.4 per cent, INE said, revising the growth from a preliminary 3.5 per cent.

The data was also below the 3.5 per cent expected by analysts polled by Reuters.

The Bank of Spain said earlier in March that it expected the country’s economy to expand by a still strong 2.7 per cent in 2025, thanks to soaring private consumption.

Growth in the Eurozone’s large economies are all expected to be considerably less, with the biggest economy Germany forecast to expand 0.2 per cent this year and Italy and France seen expanding 0.7 per cent.

Spain’s gross domestic product grew 0.8 per cent in the fourth quarter, the country’s National Statistics Institute (INE) said, confirming the expectations of analysts polled by Reuters and the preliminary data.

On an annual basis, Spain’s fourth-quarter economic output expanded 3.4 per cent, INE said, revising the growth from a preliminary 3.5 per cent. The data was also below the 3.5 per cent expected by analysts polled by Reuters.

Altogether, the data confirmed Spanish economy grew 3.2 per cent in 2024.

Spain posted a current account surplus of 1.20 billion euros ($1.30 billion) in January, compared to a surplus of 4.02 billion euros in the same month a year earlier, the Bank of Spain said on Monday.

That compared to a surplus of 1.67 billion euros in December, according to the central bank.

Meanwhile Spanish Prime Minister Pedro Sanchez suggested on Wednesday his government could roll over the budget for a second year and start working on a new bill for 2026, as the chances of passing one this year in the fragmented lower house dwindle.

Spain’s centre-left minority coalition faces a balancing act in every vote as it weighs concessions to several other parties from across the spectrum that support it on a vote-by-vote basis and which have often opposing demands, such as the hard-left Podemos and centre-right Junts.

Such a balance is even harder to achieve now Sanchez has pledged to increase Spain’s defence spending in line with the rest of the European Union, an issue that has split his cabinet.

The government had initially promised to submit a budget bill before the end of the first quarter, but it wants to have secured the support of all its allies before doing so. In the meantime, Spain is rolling over its 2023 spending plan, as it did last year.

However, Sanchez did not completely rule out submitting a 2025 spending plan - which would need to happen before the end of May.

“If we have time to get a budget this year, we will do it, and if not, we’ll start working on the 2026 budget,” he told lawmakers after announcing he would outline and start implementing a plan to boost the defence sector before the summer.

Sanchez was replying to opposition leader Alberto Nunez Feijoo, who told the premier he should not leave the parliament without saying if he was going to submit a budget for 2025.

“The budget is the first point of any defence plan,” Nunez Feijoo said. He said it should not be seen as normal “to face this context with an expired budget of a majority that no longer exists”.

Sanchez has said he could increase defence spending without going through parliament, drawing criticism from the opposition.

Spain’s economy grew 3.2 per cent in 2024, one of the fastest in the Eurozone, driven by strong domestic demand, robust tourism, and EU recovery funds, outperforming Germany, France and Italy. Economists say Spain remains a ‘bright spot’ in Europe, expecting this outperformance to continue through 2025.

Powered by strong household spending, resilient investment and a tourism sector showing no signs of fatigue, Spain delivered one of the Eurozone’s strongest growth performances in 2024, outshining larger economies and ushering in a new era of economic dynamism for Madrid.

Spain’s gross domestic product expanded by 0.8 per cent on quarterly basis during the fourth quarter of 2024, according to the final reading released by the Spanish statistics agency INE.

For the full year, the Spanish economy grew by 3.2 per cent, more than double the Eurozone average of 0.9 per cent.