Spain's Economic Growth Surpasses US: The Key Factors

Multiple institutions predict that Spain will surpass the United States this year to become the fastest-growing major developed economy in the world, with a growth rate more than three times that of the entire Eurozone.

Economists surveyed by Consensus Economics expect GDP data announced this week to show that Spain is on track to grow by 2.7% this year, driven by a combination of immigration, tourism, foreign investment, and public spending.

Furthermore, in the International Monetary Fund's (IMF) outlook report for major developed economies, Spain is on par with the G7 countries and is more favorably viewed. The IMF stated last week that it expects Spain's economy to grow by 2.9%, slightly higher than the 2.8% forecast for the United States.

As the Eurozone's fourth-largest economy, Spain is leading the region's most significant economic trend divergence. Germany, the EU's economic locomotive, has been struggling in the "weak" quagmire, and other wealthier countries, such as the Netherlands, have also been "struggling" to achieve economic growth.

Tourism is a pillar of Spain's economy and part of the reason for its economic growth, with Spain expected to break last year's record of 85 million tourists. In addition to tourism, exports from other service industries are growing even faster.

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Economy Minister Curbo stated last week that by 2024, tourism is expected to bring in 90 billion euros in revenue for Spain's balance of payments, while other service exports will bring in 100 billion euros. These services include a variety of activities for overseas clients, ranging from banking and engineering services to IT consulting, as well as universities hosting international students.

According to data from the fDi Markets database, since 2019, Spain has also been the sixth-largest destination for foreign direct investment projects globally. Renewable energy is one of Spain's strengths, with Spain securing 77 new projects last year, tying with the United States for first place globally.

Although Spain's unemployment rate of 11.2% remains high, the number of employed individuals reached a record 21.8 million in the third quarter of this year. According to Funcas calculations, immigrants have filled 40% of new jobs created in the past three years.

However, the industries with the highest number of immigrants are agriculture, hospitality, or construction, which have lower worker productivity. Industry insiders point out that Spain is experiencing "quantitative growth" driven by job filling, rather than qualitative growth.This can, to a certain extent, bring long-term growth risks, which is that the growth rate of GDP per capita will be slower than the overall GDP growth rate.

In addition, there are still many Spanish families struggling with high living costs, and the country has done too little to alleviate the severe shortage of affordable housing.

It is predicted that Spain's overall economic growth rate will slow down to 2.1% next year, but Spain's economic strength still excites the country.