Spain | Change of production model, at your service

Summary

Since the end of 2019 through the first quarter of 2024, the Gross Value Added (GVA) of the services sector has increased by 6.3%, compared to 3.7% for the total economy. In addition, the number of hours worked increased by more than 2%, compared to 0.9% for all sectors.

Key points

• Key points:
• Looking at demand-side activity, services exports are now 23% above pre-pandemic levels, with similar cumulative growth in non-tourism services sales to foreigners (25%) and consumption of non-residents in Spain (20%). There are both circumstantial and structural factors that are worth highlighting in this trend.
• In recent years, lower unit labor costs, immigration and the depreciation of the euro against the dollar have improved the competitiveness of service provision.
• Improvements in competitiveness could also explain the good performance of non-tourism services exports: with 2022 data, sales to North and Central America were up 50% over 2019, increasing their share by nearly 3 percentage points.
• Brexit may have caused a number of financial, professional and consulting services, previously produced in the UK, to move to the continent.
• In addition, the pandemic has generated a structural change in the way people work, exemplified by the higher importance of working from home, allowing activities that previously had to be close to the decision-making centers to be moved to other countries.

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