How Spain’s economy became the envy of Europe

It is a cold day in the middle of winter in Segovia, in Central Spain, and tourists gather at the foot of the Roman aquetact of the city, looking at the famous arches and taking selfies.

Many of the visitors are Spanish, but there are also people from other European countries, Asian and Latin Americans, all depicted by historical charm, gastronomy and dramatic location right away mountains north of Madrid.

“There was a moment during Covid when I thought that” there may never be tourism as before, “says Elena Miron, a local guide, dressed in a beret who was going to head a group in the city.

“But now everything is very good, and I believe that this year will be a good year as 2023 and 2024. I am happy because I can live out of this job I love.”

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

And after turning the tourist industry, there is the main reason that the fourth largest eurozone economy easily develops similar Germany, France, Italy and the UK, placing GDP enlargement 3.2% last year.

On the contrary, the German economy is reduced by 0.2% In 2024, while France grew by 1.1% Italy by 0.5% and the UK 0.9%expected.

All this helps explain why the Economist magazine considered Spain as a worldwide The best effective economy.

“The Spanish model is successful because it is a balanced model, and this is what guarantees growth stability,” says Carlos Kuerpo, a coalition minister. He emphasizes that last year Spain is responsible for 40% of the eurozone growth.

Despite the fact that he emphasized the importance of tourism, Mr. Kuerpo also pointed to financial services, technology and investment as factors that helped Spain bounce off the pandemic depth when GDP declined by 11% in one year.

“We leave COVID without scars and modernization of our economy and thus raise our potential GDP growth,” he adds.

This modernization process helps after pandemic funds from the next generation program. Spain must receive by 2026 up to 163 billion euros ($ 169 billion; £ 136 billion), making it the largest recipient of these funds along with Italy.

Spain invests money in a national rail system, low -emissions zones in cities and cities, as well as in the electric vehicles and subsidies for small businesses.

“Public expenses were high and is responsible for about half the growth from the pandemic,” says Maria Hesus Waldemoras, a teacher of economics in the IEE Spain.

Other major European economies have seen that their growth stops greater than Spain in the industry, which, she said, “suffers a lot of factors such as the high cost of energy, competition from China and other Asian countries , and other Asian countries, the cost of transition to a more sustainable environmental model and trade protectionism. “

Ever since COVID, another major economic problem for Spain has become a crisis of life caused by a narrow place on the supply chain and Russian invasion in Ukraine in 2022. Inflation reached its annual rate in 11% in July of the same year, with the fact that this year, with the help of energy prices affecting Spaniards, is especially difficult, but by the end of 2024 it was Decrease to 2.8%.

Madrid believes that the subsidies he introduced to reduce fuel consumption and promoting public transportation were key in mitigating the impact of energy prices, as well as several rates to the minimum wage.

In the midst of the European energy crisis, Spain and Portugal also agreed with Brussels, the so -called “Iberian exception”, which allows them to limit the gas price used to obtain electricity to reduce consumer accounts.

Mr. Kuerpo claims that such measures helped to resist Spain’s traditional vulnerability to economic shocks.

“Spain turns out to be more resistant to consistent turmoil – including the inflation shock that came with the war in Ukraine,” he said. “And I think this is part of the common protective shield that we created for our consumers and for our firms.”

Green energy in the country is considered as another favorable factor not only in the guarantee of electricity, but also to stimulate investment. Spain has The second largest Infrastructure of renewable energy sources in the EU.

The latter is the good for the country, which is the second largest car manufacturer in Europe, according to Wayne Griffiths, CEO in British and Cup. Although Spanish electric vehicles are behind the rest of Europe, it sees huge potential in the field.

“(In Spain) We have all the factors you need to be successful: competitive, well-trained people, as well as the energy policy behind it,” he says. “There is no point in doing zero cars when you use dirty energy.”

Despite these positives, many years of Spain’s economy was chronically high -speed, which is the largest in the EU and almost twice as much as the block average. However, the situation improved in the last quarter of 2024, when the unemployment rate in Spanish unemployment decreased to 10.6%, its The lowest level since 2008.

Meanwhile, the number of people working in Spain is now 22 million, high. A working reform that encourages the stability of the work is regarded as a key reason for this.

This reform has increased restrictions on the use of temporary contracts, contributing to greater flexibility in the use of permanent contracts. This reduced the number of workers in temporary employment without interfere with job creation.

In addition, although the arrival of immigrants has led to a tough political debate, their absorption to the job market has see many as important for a country with a fast -growing population.

Socialist Prime Minister Pedro Sanchez was opening up the need for immigrants, describing their contribution to the economy as “fundamental”.

The European Commission predicts that this year, Spain will still grow among the large block economies and will remain ahead of the EU average. However, there are problems on the horizon.

Great dependence on tourism – and a Growing a reverse reaction Against the locals industry is one of the problems.

Another – a huge state debt of Spain which above than the country’s annual economic products.

Maria Hesus Waldemoras warns that it is “the imbalance that we need to correct not only because the new EU fiscal norms require it, but because it can cause financial instability.”

In addition, the housing crisis has flared up all over the country, resulting in millions of Spaniards fighting to find affordable housing.

It is difficult to solve such problems with an uncertain and deep polarized political landscape. But, although he tries to solve these puzzles, Spain enjoys the engine status of European growth.