How the Spanish economy became the envy of Europe

This is frosty in the middle of the winter in Segovia, in Central Spain, and tourists gather at the foot of the city Roman aqueduct, watching in their famous arches and take selfies.

Many visitors are Spanish, but there are also people from other European countries, Asians and Latinos, all drawn from the historical charm, gastronomy and a dramatic location of Segovi right beyond the mountains north of Madrid.

“There was a moment during Covid when I thought,” Maybe tourism would never be the way he was before, “says Elena Miron, a local guide dressed in a fuchsia beret that is about to run A group in the city.

“But now things are very good and I feel that this year it will be a good year, like 2023 and 2024. I am happy because I can live from this work I love.”

Spain received a record 94 million visitors in 2024 and is now fighting with France, which has 100 million, for the largest foreign tourist center in the world.

And the expansion of the tourism industry after the forge expansion is the main reason why the fourth largest economy of the euro area easily greasy the likes of Germany, France, Italy and the United Kingdom, publishing an increase in GDP from 3.2% last year.

In contrast, the German economy Agreed with 0.2% In 2024, while France increased by 1.1%, Italy by 0.5%, and UK from 0.9%is expected.

All this helps to explain why Economist magazine ranked Spain as a worldwide The best performing economy.

“The Spanish model is successful because it is a balanced model and that is what guarantees growth resilience,” says Carlos Querpo, a business minister in the coalition government, led by socialists. He points out that Spain is responsible for 40% of the Eurozone growth last year.

Although it emphasized the importance of tourism, Cuerpo also cited financial services, technologies and investments as factors that helped Spain to bounce from the depths of the pandemic when GDP contracted by 11% in one year.

“We leave Covid with no scars and by modernizing our economy and therefore raising our potential GDP growth,” he adds.

This modernization process is supported by the recovery funds after the next -generation EU program. Spain should receive up to € 163 billion by 2026 (£ 169 billion; £ 136 billion), making it the largest recipient of these funds with Italy.

Spain invests money in the national railway system, low emissions areas in cities and cities, as well as in the electric vehicle industry and subsidies for small business.

“Public costs are high and responsible for approximately half of our growth after the pandemic,” says Maria Jesus Valdemoros, a teacher of economics in the Spanish Business School.

Other major European economies are monitoring their growth, stimulated by their greater reading by Spain on the industry, which, in her opinion A more resistant environmental model and commercial protectionism. “

From Covid, the other major economic challenge for Spain is the crisis of living costs caused by the difficulties of the supply chain and the Russian invasion of Ukraine in 2022. Inflation reached a maximum speed of 11% in July of the same year, with the prices of energy, hitting energy prices, hitting energy prices that hit the energy that hit energy prices that hit the energy that hit the energy that hit energy prices that hit the energy that hit energy prices that hit energy prices that hit the energy that hit energy prices that hit the energy that hit energy prices that hit the energy that hit energy prices that hit the energy that hit the energy that hit the energy that hit energy prices that hit energy prices that hit the energy that hit energy prices that hit the energy that hit energy prices that hit the energy that hit energy prices that hit energy prices that hit the energy that hit energy prices that hit the energy that hit energy prices that hit the energy that hit energy prices that hit the energy that hit the energy that struck energy prices that hit the energy that struck The Spaniards particularly difficult, but by the end of 2024 there was It fell back to 2.8%.

Madrid believes that the subsidies he has introduced to reduce fuel consumption and to promote the use of public transport are key to mitigating the impact of energy rates, as well as several increases to the minimum wage.

In the midst of the European energy crisis, Spain and Portugal also negotiated with Brussels, the so -called “Iberian exception”, which allows them to limit the price of gas used to generate electricity to reduce consumers' bills.

Cuerpo claims that such measures have helped to oppose Spain's traditional vulnerability to economic turmoil.

“Spain turns out to be more resistant to consistent shocks – including the inflation shock that came with the war in Ukraine,” he said. “And I think this is part of the overall protective shield we have set for our users and for our companies.”

The green energy of the country is seen as another favorable factor, not only in guaranteeing electricity, but also stimulates investment. Spain has second largest Renewable energy infrastructure in the EU.

The latter is a grace for a country that is the second largest car manufacturer in Europe, according to Wayne Griffiths, CEO of Sezal and Cupra. Although the production of Spanish electric vehicles is lagging behind the rest of Europe, it sees huge potential in the area.

“(In Spain) we have all the factors you need to succeed: competitive, well -trained people, as well as an energy policy behind it,” he says. “It doesn't make sense to make zero cars if you use dirty energy.”

Despite these positives, the long -standing weakness of Spain's economy is a chronically high unemployment rate, which is the largest in the EU and almost doubles the average for the block. However, the situation improved in the last quarter of 2024, when Spanish unemployment unemployment decreased to 10.6% Low -level level since 2008

Meanwhile, the number of people in employment in Spain is now 22 million, a record high. Labor reform that promotes workplace stability is seen as a key cause.

This reform has increased restrictions on the use of temporary contracts by companies, favorable flexibility in using permanent contracts. It reduced the number of workers in temporary employment without preventing job creation.

Moreover, despite Seen by many as decisive For a country with a rapidly aging population.

Socialist Prime Minister Pedro Sanchez is honest in emphasizing the need for immigrants, describing their contribution to the economy as “basic”.

The European Commission predicts that Spain will continue to grow among the major economies of the block this year and will remain before the EU average. However, the challenges are outlined on the horizon.

The heavy relying on tourism – and a growing twist Against the industry from local people – there is a concern.

Another is the huge public debt of Spain who is higher than the country's annual economic production.

Maria Hesus Valdemoros warns that this is a “imbalance we need to adjust, not only because the new EU fiscal standards require it, but because it can cause financial instability.”

In addition, the housing crisis has erupted throughout the country, leaving millions of Spaniards who are struggling to find affordable accommodation.

With uncertain and deeply polarized political landscape, it is difficult for the government of Sanchez's minority to deal with such problems. But although he tries to resolve these puzzles, Spain enjoys his status as a European growth engine.