Spain Economic Outlook. December 2024

Summary

GDP growth in 2024 has been revised upward by 0.2 percentage points, reaching 3.1%, driven by stronger-than-expected performance in the third quarter and a slight acceleration in job creation in the fourth. Growth is projected at 2.3% in 2025 and could settle at 1.7% in 2026.

Key points

• Key points:
• The potential increase in U.S. tariffs suggests that growth will slow in 2025 to 2.1% in the U.S. and 4.1% in China. The eurozone is expected to grow by only around 0.8% in 2024 and 1.0% in 2025.
• The good performance of the economy is based on improvements in competitiveness—especially in services—, the increase in the labor force—mainly immigrants—and a fiscal policy that continues to support domestic demand.
• Several factors could mitigate this negative impact, driving GDP growth over the next two years. An increased supply of renewable energy, the recovery of the agri-food sector, and stronger domestic demand, supported by lower inflation and employment gains, are consolidating economic growth above initial expectations.
• There are doubts about the tourism sector’s capacity to continue growing. Housing shortages limit improvements in quality of life and may hinder immigration. Investment remains weak, and economic policy uncertainty remains high.

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