Spain’s economy to grow by 2.4% this year, says the IMF – making it the fastest growing in Europe

SPAIN is still the golden child of Europe after posting economic growth of 2.4% this year, according to the International Monetary Fund.

The latest World Economic Outlook report registered an expansion of GDP far in excess of its European neighbours, and predicts that, at 2.2%, the pace will be similar in 2025.

Neither France (0.9%), the UK (0.7%), Italy (0.7%) nor Germany (0.2%) managed economic growth above 1%.

The impressive figures have exceeded expectations, according to Spain’s Economy Minister, Carlos Cuerpo.

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“Based on the good progress in the first six months of the year (…) we will upgrade our growth forecasts for 2024 and 2025,” he told El Pais. 

Cuerpo mentioned strong unemployment, investment and – more controversially – breakneck growth in the tourism sector, which has driven so much unrest across Spain’s most desirable locations.

The data suggests that spending by foreign tourists is growing by a staggering 5% per quarter, which would imply a growth rate of 20% over 12 months were it consistently maintained.

The Spanish government had initially aimed for economic growth of 2% this year and 1.9% in 2025.

However, last month, Cuerpo indicated that his team would likely revise the 2024 growth target upwards to ‘close to 2.5%.’

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Spain’s economy showed robust performance in the first quarter of 2024, outpacing its main European Union peers who squeaked along with an average growth rate of 0.8%.

It underscores the strength of the eurozone’s fourth-largest economy. However concern is growing in the sectors that are leading the growth.

A reliance on growth in tourism has seen a backlash, driven by the expansion of tourist rentals, its impact on the housing market, and the harm done to the environment by continual development along Spain’s coasts.

However, with Cuerpo announcing that the budget deficit is projected to fall to 3% of GDP this year and keep dropping next year, it is not hard to see the appeal in such achievable growth. 

Spain’s debt-to-GDP ratio is also set to fall to below 100% by 2027.