It’s no surprise that tourism is vital to the Spanish economy, contributing 12.3% to GDP in 2023. This growth continues, with a record of 88.5 million international tourists in the first 11 months of 2024, a 10.6% increase from 2023. Non-travel services like business services, transport, telecommunications and IT also grew significantly in 2021 and 2022, by 16.1% and 28.9%, respectively, reflecting a global shift towards a more service-oriented economy. Moreover, Spain still has room to grow in this area, as the share of non-travel services in GDP was 1.7 percentage points below the euro area average in 2021, according to the Bank of Spain.
Spain’s population dynamics also played a significant role in its economic recovery. Between October 2019 and July 2024, the population aged over 15 grew by 5.6%, compared to the eurozone’s growth of 2.61%. The non-EU foreign population in Spain grew significantly, increasing by 40.57%, driven by government policies that facilitated the regularisation of non-EU foreigners, eased student-to-work visa transitions, and introduced the digital nomad visa, attracting more foreign talent. As a result, the evolution of Spanish GDP per capita appears relatively less impressive than overall GDP, having grown 3.5% since the third quarter of 2019, slightly above the eurozone’s growth rate of 2.9%.
Meanwhile, government expenditure increased to support the economy during the Covid crisis and has since continued to grow above its pre-Covid trend, rising to 45.5% of GDP in 2024 from 42% in 2019. The debt-to-GDP ratio remains around 102.8% in 2024 and is decreasing thanks to strong GDP growth and increased tax revenue collection, partly due to fiscal drag. However, caution is needed to ensure this fiscal drag does not become a true drag on the economy in the future. Total government revenue increased from 39% of GDP in 2019 to 42.5% by the end of 2024.