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Spain’s Economy Posts Strong Growth in 2024, Outpacing Eurozone Peers

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Spain’s economy expanded by 3.2% in 2024, making it one of the fastest-growing economies in the eurozone. Strong domestic demand, a thriving tourism sector, and the continued rollout of European recovery funds drove the country’s robust performance, outpacing major economies like Germany, France, and Italy. Economists expect Spain’s economic momentum to carry into 2025, maintaining its position as a “bright spot” in Europe.

Strong Economic Expansion

Spain’s GDP grew by 0.8% in the fourth quarter of 2024, according to the National Statistics Institute (INE), bringing full-year growth to 3.2%. This figure is more than three times the eurozone’s average growth of 0.9%. Among eurozone nations, only Malta (6%), Croatia (3.8%), and Cyprus (3.4%) recorded stronger growth.

In contrast, Germany’s economy shrank by 0.2%, while France and Italy registered modest growth of 1.1% and 0.7%, respectively.

The Spanish economy benefited from a mix of structural improvements and favorable economic conditions. Key growth drivers included resilient household spending, a booming tourism industry, and effective use of EU recovery funds.

Drivers of Growth

Domestic demand played a crucial role in Spain’s expansion, contributing 3.6 percentage points to overall GDP growth. Household consumption rose by 1%, while investment surged by 2.9%. Public expenditure also increased by 0.3%. However, external demand remained weak, as imports (+1.4%) outpaced sluggish exports (+0.1%), creating a slight drag on overall growth.

Across industries, most sectors saw gains. The construction sector grew by 2.7%, services by 1.0%, and manufacturing by 0.5%. Only the primary sector, which includes agriculture and fishing, experienced a decline of 0.7%.

Tourism Fuels Economic Strength

Spain’s tourism sector continued its strong recovery, welcoming an estimated 94 million international visitors in 2024—a 10% increase from the previous year. Economist Judit Montoriol Garriga from CaixaBank Research noted that the sector showed “no signs of cyclical exhaustion,” with tourism-related GDP projected to rise by 3.6% in 2025. The industry’s growing contribution to Spain’s economy is expected to reach 13.2% of GDP, up from 12.9% in 2024.

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The tourism sector’s success has significantly benefited related industries, including retail, hospitality, and transport services.

Outlook for 2025: Continued Growth, but Slower Pace

Spain’s economic growth is expected to moderate in 2025, though it is likely to remain one of the strongest performers in the eurozone. The Organisation for Economic Co-operation and Development (OECD) forecasts a 2.6% GDP increase for Spain, compared to projected growth of just 0.4% in Germany, 0.8% in France, and 0.7% in Italy.

Montoriol Garriga anticipates 2.5% growth in 2025, driven by factors such as falling interest rates, higher household purchasing power, and continued EU recovery fund disbursements. The latest outlook from BBVA also suggests that Spain and Portugal will continue to outperform core eurozone economies.

Inflation and Economic Stability

Inflation remains relatively stable in Spain. Harmonized consumer prices rose by 2.9% year-on-year in February 2025, with core inflation—excluding volatile energy and food prices—easing to 2.1%, close to the European Central Bank’s 2% target. However, some economists warn that rising producer prices, which surged 6.6% year-on-year in February, could push consumer prices higher in the coming months.

Recovery Funds Continue to Support Growth

Spain has benefited significantly from the European Union’s NextGenerationEU (NGEU) recovery program. By the end of 2024, the country had allocated €47.6 billion in grants and tenders, representing about 60% of the total grant package. In December 2024, Spain requested an additional €8 billion in grants and €15.9 billion in loans from the European Commission.

According to a Bank of Spain survey, nearly half (45%) of Spanish companies stated they would not have made their investments without NGEU funding, highlighting the program’s role in supporting economic expansion.

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Labour Market and Housing Sector

Spain’s labor market remained strong in 2024. The unemployment rate fell to 10.61% in the fourth quarter, marking its lowest level since 2008. Total hours worked increased by 2.8% year-on-year, while full-time equivalent employment grew by 2.3%.

Meanwhile, the housing market continued to show resilience. Home prices rose by 5.8% in 2024 and are expected to increase by 5.9% in 2025. Transaction prices climbed by 8.4% last year, with further growth anticipated.

Spain’s Economic Outlook Remains Positive

Despite expectations of a slowdown from 2024’s rapid pace, Spain’s economy is likely to remain one of the eurozone’s strongest performers in the coming years. The OECD projects 2.1% growth for Spain in 2026—nearly double the forecasted growth rates for Germany, France, and Italy.

With a robust domestic economy, a thriving tourism sector, and continued investment from EU recovery funds, Spain’s post-pandemic economic expansion appears set to continue well into the future.

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Oil Tanker Attacked in Strait of Hormuz, Crew Evacuated

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An oil tanker was attacked off the coast of Musandam in the Strait of Hormuz on Sunday, leaving four people injured and prompting the evacuation of all 20 crew members, according to Oman’s Maritime Security Centre.

The vessel, named Skylight and flying the flag of the Republic of Palau, was targeted around five nautical miles (9.26 km) north of Khasab Port, Oman authorities said. The incident marked the first reported attack on a ship in the strategic Strait of Hormuz on Sunday morning.

Oman’s Maritime Security Centre confirmed that the tanker’s crew included 15 Indian nationals and five Iranian nationals, all of whom were safely evacuated. The four injured crew members were transferred for medical treatment. Authorities did not immediately provide details on the cause of the attack or the identities of the attackers.

The incident has heightened concerns about shipping safety in one of the world’s most important oil transit routes. The Strait of Hormuz handles a significant portion of global crude oil exports, and any disruption to its operations can have major implications for energy markets.

In response to the attack, major shipping companies have suspended operations through the Strait of Hormuz. Danish shipping and logistics giant Maersk announced on Sunday afternoon that it had halted all future transits through the waterway until further notice. Other operators are reportedly reviewing their shipping schedules and implementing additional safety measures.

The attack comes amid ongoing regional tensions, with the Strait of Hormuz often at the center of geopolitical disputes. Analysts say the incident could lead to further disruptions in global oil supplies and push energy prices higher if shipping companies continue to avoid the area.

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Maritime security experts emphasize the need for close monitoring of shipping traffic and coordinated responses to ensure the safety of vessels and crews in the region. The rapid evacuation of Skylight’s crew has been described as a positive example of emergency preparedness, but the attack underscores the continuing risks faced by commercial shipping in the Gulf.

Authorities are continuing to investigate the circumstances of the attack and are coordinating with international maritime agencies to prevent further incidents. The situation remains fluid, and the potential impact on shipping and regional security is likely to unfold in the coming days.

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EU Household Energy Prices Remain Above Pre-War Levels Despite Stabilisation

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Residential electricity and natural gas prices across the European Union remain higher than before Russia’s invasion of Ukraine, even though markets have steadied in recent years.

The war, which began in February 2022 and has now entered its fifth year, reshaped Europe’s energy landscape. According to the European Council, Russia’s share of EU pipeline gas imports fell sharply from around 40 per cent in 2021 to about 6 per cent in 2025, following sanctions, embargoes and efforts to diversify supplies.

New data from Eurostat show that between the first half of 2021 and the first half of 2025, household electricity prices in the EU rose 30 per cent, from 22 cents per kilowatt-hour to 28.7 cents. Over the same period, natural gas prices climbed 79 per cent, from 6.4 cents to 11.4 cents per kilowatt-hour.

The Household Energy Price Index (HEPI), compiled by Energie-Control Austria, MEKH and VaasaETT, tracks monthly end-user prices in European capital cities. Its January 2026 figures indicate that electricity prices across EU capitals were 5 per cent higher than in January 2022. However, compared with January 2021, prices were up 38 per cent.

Some cities experienced particularly sharp increases over the five-year period. Electricity prices more than doubled in Vilnius, rising 102 per cent. Other large jumps were recorded in Bucharest (88 per cent), Bern (86 per cent), Kyiv (77 per cent), Amsterdam (75 per cent), Riga (74 per cent), Brussels (67 per cent) and London (64 per cent).

Only Copenhagen and Budapest posted declines over that period, at minus 16 per cent and minus 8 per cent respectively.

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Among the capitals of Europe’s five largest economies, London and Rome saw notable increases, while Madrid and Berlin recorded relatively modest rises. Paris remained below the EU average increase.

Energy analysts at the European Energy and Climate Policy (IEECP) say the electricity mix has been a decisive factor. Countries such as Spain benefit from a higher share of wind, solar and hydropower, while Nordic nations rely heavily on hydropower, geothermal and wind energy, reducing exposure to fossil fuel price swings.

Looking only at the period from January 2022 to January 2026 presents a different trend. Copenhagen recorded a 44 per cent fall in electricity prices, while London, Madrid, Berlin and Rome also saw declines. Paris, by contrast, registered a 21 per cent increase. Vilnius showed the largest EU rise at 70 per cent, while Kyiv topped the overall list at 87 per cent.

Natural gas prices across EU capitals edged down by 1 per cent between January 2022 and January 2026. Berlin, Brussels and Athens recorded declines of around 40 per cent, while Riga, Warsaw and Lisbon saw strong increases.

Despite the recent stabilisation, household energy bills across much of Europe remain well above pre-invasion levels, reflecting the lasting impact of the energy crisis.

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Transatlantic Tensions on Digital Rules Highlight Need for Cooperation

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Discussions between Europe and the United States over digital regulation continue to be marked by miscommunication and frustration, even as competitors observe from the sidelines. Europeans and Americans talk past each other while rivals watch. The European Union can set its own standards, but in an interconnected economy, decoupling fantasies and grandstanding won’t help.

The debate often centres on “free speech” concerns voiced by U.S. tech companies and policymakers in response to the EU’s legislative framework for digital platforms. In Europe, such narratives typically prompt defensive reactions. Some Europeans respond with a blunt message: “This is our land, our Union, our laws, follow them, or leave the EU—we’ll find alternative products to use!” Public awareness of American constitutional amendments is low across Europe, just as Americans pay little attention to European digital acts and regulations.

The transatlantic dialogue is further complicated by the global nature of social media platforms. Any EU legislation affecting user experience inevitably influences the functioning of these platforms worldwide, touching on what Americans see as free speech rights. The EU also seeks to extend its influence through the “Brussels effect,” ensuring that European rules shape global standards, while the U.S. maintains a large trade surplus in services and competes technologically with China. This mix of economic, political, and regulatory factors explains why U.S. attention is sharply focused on Europe’s digital policies.

Europeans argue that their 450-million-consumer market has the right to set rules that reflect local principles and values. Attempts to adjust or simplify regulations are difficult, with efforts often met with political resistance and scrutiny. The regulatory ecosystem in Europe supports industries of lawyers, consultants, and experts whose work depends on maintaining complex rules, making reform a sensitive topic.

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On the American side, anti-EU rhetoric by public figures has sometimes compounded the problem, drowning out moderates and reinforcing defensive European responses. Analysts note that both regions have seen productive voices sidelined as grandstanding and negative statements dominate public discourse.

Observers argue that long-term thinking is necessary. By evaluating the EU-U.S. tech partnership in the broader context of global alliances, including China and Russia, policymakers can better assess priorities and avoid unnecessary disruption. Blank-slate decoupling between Europe and the United States is unrealistic, and delaying constructive dialogue risks broader economic consequences.

Experts warn that continued transatlantic infighting benefits other global powers and weakens the ability of both regions to set coherent standards in emerging technologies. The message from analysts is clear: cooperation, not confrontation, will determine whether the EU and U.S. can maintain leadership in digital regulation while safeguarding economic and technological interests.

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