Analysts expect Spain’s economy to continue to recover in the coming months, despite being likely to stay vulnerable to the continuing effects of the Valencia floods, and with the possibility of tariffs being imposed on the EU by the US.
Strong performance in the tourism and agricultural sectors helped boost Spain’s GDP for the fourth quarter of 2024, according to official figures.
Spain’s quarter-on-quarter gross domestic product (GDP) growth rate for the period saw a rise of 0.8%, according to the National Statistics Institute (INE). That was the same as the previous quarter and above analyst estimates of 0.6%.
Domestic demand added 1.2% to GDP as household final consumption inched up 1%, with government spending rising 0.4%. Spanish government spending post-pandemic has been significantly supported by public investment schemes such as NextGenerationEU.
Spain bucks the European trend
Imports of services and goods rose 1.3%, while exports grew 0.1%.
Industrial activity increased 0.3%, mainly supported by robust manufacturing and construction sectors. Services rose 0.9% as well, however, the primary sector dropped 0.7%.
On a year-on-year basis, Spain’s GDP grew 3.5% in the fourth quarter of 2024, an increase from the previous quarter’s of 3.3%, and above market estimates of 3.2%.
The country’s economy advanced 3.2% for the full year 2024, well ahead of its other peers in the eurozone.
Spanish unemployment rate hits lowest in more than 16 years
Spain’s unemployment rate for the fourth quarter of 2024 came in at 10.61%, according to INE, signifying a fall from the previous quarter’s 11.21%, and below analyst expectations of 11.1%. It was also the lowest unemployment rate since the second quarter of 2008.
The number of people without jobs in Q4 2024 came up to 2.596 million, a drop of 158,600 compared with the previous quarter. The number of people with jobs in the fourth quarter climbed to 21.86 million, which was a rise of 34,800.
Rental problems remain
The industrial sector added 7,000 jobs in the fourth quarter 2024, whereas the services sector grew by 24,000 jobs and the agricultural sector increased by 3,200 jobs. Job growth in the construction sector was sluggish, with only 600 jobs added in the fourth quarter.
However, Spain is still dealing with an ongoing housing crisis, as well as an increasing cost of living crisis, which has caused rental prices to soar and having a detrimental effect on living standards.
BBVA Research highlighted on its website that it expects the Spanish economy to continue to recover in the coming months, however, notes that it is likely to stay vulnerable to the ongoing effects of the Valencia floods, as well as any tariffs imposed on the EU by the US. The company estimates Spain’s GDP to grow 2.3% in 2025 and 1.7% in 2026.
