Walter Finch
IT could be easy to find oneself overwhelmed with the constant drum beat of bad news and terrible prognostications.
If it’s not the threat of (or actual) war, the terrible forecasts for the state of the environment, or doom-laden demographics, then it’s crime, inflation and immigration.
In Spain, people fret about reservoir levels, the housing crisis and the political extremes crowding out the middle.
But what perhaps doesn’t get enough attention is the fact that the Spanish economy has been busily transforming itself into the engine of economic growth for the eurozone.
READ MORE: Spain’s economy to grow more than expected this year, according to government forecast
Despite all the doom and gloom, Spain is actually the success story of Europe, and not just in football where the team are European champions, but also posting GDP growth that far outstrips its stagnant northern neighbours.
International observers started to take note last year as Spain smashed its eurozone peers out of the park with an economy that grew 2.5%, one and a half times as fast as France (1.1%) and Italy (1%).
And spare a thought for poor Germany, the country Spain is supplanting as Europe’s economic engine, which actually shrank in 2023.
And it only gets better: the OECD recently upgraded its forecast for Spain’s economy this year from 2.5% to 2.8%, while its peers can only splutter along.
Not to be outdone, Spain’s National Institute of Statistics (INE) has just revised economic growth upwards even more: to a miraculous 3.1%.
Spain, the fourth largest economy in the eurozone and the 15th in the world, is already home to several household names and industrial champions.
These include Europe’s fourth largest bank Santander and the world’s largest textile company Inditex, parent to highstreet brand Zara, owned by Amancio Ortega who is worth €1.43 billion.
Then there’s infrastructure construction company Ferrovial, which owned 25% of Heathrow Airport – Europe’s busiest – until last year and also built its latest runway expansion.
Meanwhile, state-owned ship builders Navantia are currently beavering away on modules for three ships for Britain’s Royal Navy in the Cadiz shipyards.
READ MORE: Spain breaks all-time tourism record in August despite rising prices and protests by locals
But what else is driving all this economic growth?
Unsurprisingly, a large majority of it comes in the country’s tourism sector, which saw record numbers of foreign visitors in August.
This tourism boom has already eclipsed the high water mark of 2019, with a total of 13.6 million people visiting the country last month, and it shows no signs of abating.
READ MORE: Inflation in Spain falls to its lowest level in three-and-a-half years
It goes with the 10.9 million who came in July – a 7.3% rise year-on-year – and they splashed out a cumulative €15.5 billion over the course of the month – another huge 11.9% increase on last year
Setting aside the persistent gripes and protests about ‘overtourism’, the figures are driving a surge in developments along Spain’s coasts and islands, including a tsunami of five-star hotels and golf resorts.
There is plenty to crow about in other sectors, too.
Spain’s exports hit a record €33.2 billion in July, up 9.3% year-on-year, with France the biggest customer. For comparison, EU exports as a whole grew by 7.4%, easily outstripping Germany (5.4%), France (7.1%) and Italy (6.8%).
And – Brits close your eyes – exceeding UK export growth, which actually shrank by -15.5% in the same month.
Spain’s exports grew most strongly in food, beverages and tobacco (2.4%), while cars remain the number one export.
In fact, Spain is the eighth largest car manufacturer in the world and hosts 17 major manufacturing plants, producing vehicles for foreign titans such as Nissan, Renault, Ford, Mercedes, Volkswagen and others.
And not forgetting Spanish homegrown car maker Seat (although owned by VW), which is located in Martorell outside Barcelona.
Wherever you look across the country you see records being broken. Spain’s housing market has seen near-double digit price rises year-on-year, completely bucking the trend in Europe.
A home in Spain now costs an average of €2,176 sqm.
Despite the record price rises, sales in the housing market jumped by nearly a fifth (19.4%) in July to reach levels not seen since the boom (err bubble) that preceded the financial crash in 2008.
Interestingly, more than half of these property purchases were made in cash, indicating that there are a lot of wealthy people with money to burn in Spain.
Even the great beast of inflation seems to have finally been slain; falling sharply again to 1.5% this month – the lowest rate since 2021, before the dual shocks of Covid and the Russian invasion of Ukraine had taken hold.
Long gone are the dark days of the 1970s, when two million Spaniards were forced to migrate to Germany and northern Europe in search of work.
Now a new class of Spaniards has arisen off the back of this success, who enjoy exotic foreign holidays, drive expensive cars and – perhaps most importantly of all – own more than one property.
