Spain’s economy to grow more than expected this year, according to government forecast

SPAIN’S economy is roaring even louder than previously thought, according to the government’s revised growth forecast for this year. 

Economy Minister Carlos Cuerpo announced that the government will update its economic projections today, with the new forecast placing Spain’s economic growth at 2.7% for 2024.

It is an increase of 0.3 percentage points from its previous prediction in July.

This upward revision is largely due to a recent update of GDP data by the National Statistics Institute, which revealed that the Spanish economy has expanded at a faster pace than previously estimated. 

As a result, the government is now expecting the economy to match last year’s growth of 2.5% and to outperform most of its European counterparts.

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The government’s updated forecast is not limited to this year. It will also revise projections for 2025 and 2026, which were initially set at 2.2% and 2%, respectively. 

Moreover, the revision is expected to have implications for the country’s debt reduction strategy, with the latest data showing the national debt at under 105% of GDP for 2023. 

This beats the government’s target for 2024, signalling that Spain is fiscally stronger than previously thought.

The revised forecast will also have implications for the government’s economic projections for 2025 and 2026, as well as its debt reduction targets. 

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The updated GDP data has shown that Spain’s debt-to-GDP ratio is lower than previously expected, providing the government with more fiscal flexibility.

The increased growth forecast suggests that the Spanish economy is on a solid footing and could support further job creation and investment.

The positive has been offset somewhat by the revelation that the number of people on the government payroll in Spain now outnumber the number of people working in the private sector.

Recent figures show that 18.21 million people in Spain are currently receiving state income through pensions, public sector salaries, or social benefits.

This is compared to 17.69 million people earning through private enterprise, the Objective reports. 

The milestone marks a pivotal moment in the country’s economy and highlights growing concerns over future financial sustainability, despite the current optimistic outlook.

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

Spain’s ageing population appears to be at the heart of the issue.

The number of pensioners has soared to 9.2 million as of August, equal to 44% of the working population of just 21.6 million people, according to Spain’s National Statistics Institute (INE).

With only six in 10 people economically active out of a total population of 48.8 million, it means less than half of people in Spain are shouldering the country’s pension payments, which now exceed €12.8 billion per month. 

And in a further ironic twist, state expenditure on pensions is growing at a faster rate for public sector retirees than for those in the private sector. 

Pensions for civil servants, under Spain’s Clases Pasivas system, now account for nearly 711,000 beneficiaries, costing the state €1.57 billion monthly.

Of the Spanish population paying for these pensions, nearly half of Social Security contributors (46%) are now over 45, showcasing just how top-heavy Spain’s demographics have become.

Five years ago this figure sat at 41%, raising concerns about how the state will support an ever-larger pool of pensioners.