Spain is emerging as an attractive tourist destination, while impressing with its remarkable economic growth rate, competing with even the United States.
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| Spain is emerging as an attractive tourist destination, leading Europe in growth and competing on par with the US. (Source: sandaya.co.uk) |
Many factors have contributed to the economy's resilience, from a boom in tourism to its resilience to global fluctuations.
Tourism has played a key role in Spain's economic growth in recent years. According to the Bank of Spain, it is a "fundamental" driver that will help Spain become the fastest-growing major economy in Europe by 2024, even surpassing the United States, according to estimates by the International Monetary Fund (IMF).
Spain's gross domestic product (GDP) could grow by 3.1% in 2024, compared with an estimated 2.8% growth in the US, the IMF said. Europe's fourth-largest economy is also expected to post strong growth of 2.7% in 2023.
Spain's Economy Minister Carlos Cuerpo has said tourism is a key factor in the country's strong growth from 2021 onwards, following the Covid-19 pandemic.
Other experts agree. Toni Roldan, director of the Esade Center for Economic Policy, said the tourism industry is doing very well and has changed in nature. Spanish tourism is no longer just about “cheap beach vacations” but also includes high-end experiences such as visiting famous wineries.
Spain’s Ministry of Industry and Tourism estimates that 94 million foreign tourists visited last year, a record number, spending around 126 billion euros ($132 billion). Tourism’s contribution to the economy has also increased significantly, accounting for more than 12% of Spain’s GDP in 2023 and almost the same proportion of total employment.
In addition, immigration has also contributed to Spain's economic growth. About half a million net immigrants have arrived in Spain each year since 2021, adding to the country's labor and consumer base. Since most immigrants come from Latin America, economic integration is easier due to language and cultural similarities.
Another advantage for Spain is that it sources natural gas mainly from North Africa, which will help it avoid sharp energy price increases after the Russia-Ukraine conflict in 2022. Meanwhile, high energy costs have held back German industry, one of the factors that has weakened Europe’s largest economy over the past two years.
Another strength of Spain is that it is less dependent on exporting goods to the US than other European countries.
Spain’s exports to the US will account for just 1.3% of GDP in 2023, compared with 3.1% for the 20 economies that use the euro, George Buckley, Nomura’s chief European economist, said, citing IMF data. That means Spain will be less affected by the proposed import tariffs on goods proposed by US President Donald Trump.
Although economists predict a slowdown in Spain's growth, the country is still expected to continue to outperform the Eurozone over the next year or two.
The IMF forecasts Spain will grow 2.3% this year, while the eurozone is forecast to grow 1% and the US economy 2.7%. However, weaker US growth in 2025 will leave the US far behind Europe’s “star” economy, according to Citi, which has similar growth forecasts for Spain and the eurozone.
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