Spain | The new leaders of the pack

In 2022, Spanish GDP growth again outstripped the eurozone average. Moreover, import prices rose further, enabling the country to maintain its current account surplus and therefore reduce its reliance on external funding.

Key points

• Key points:
• The larger drop in GDP during the pandemic and the strong post-lockdown rebound by the services sector go a long way in explaining Spain's faster growth in 2022 compared to the rest of the eurozone.
• In addition, Spain delivered another good performance in terms of goods exports. Trade balance data show that sales of goods abroad were 5% higher in 2022 than three years ago.
• Spanish companies have become more competitive since the outbreak of the pandemic as both business margins and unit labor costs have increased less than in the eurozone as a whole. From 2019 through the third quarter of 2022, annual average growth of the GDP deflator (the price of domestically-produced goods) in Spain was nearly half a percentage point less than in the EMU.
• Looking forward, improved competitiveness on the back of investment to diversify the country's energy mix should continue to drive exports.
• Businesses must take the initiative and invest much more heavily in employee training. The Government must see training as a public good and steer the limited resources it has at its disposal to enhance the efficiency of systems that match labor supply and demand.

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