Spain generates half of the EU's economic growth

BarcelonaThe Spanish economy closed the fourth quarter of 2024 with growth far exceeding that of major European economies, a trend that has continued for almost two years, contributing half of the growth recorded in the European Union. Domestic consumption and investment were the two major drivers of the Spanish economy, whose weak point is the foreign sector, despite record tourism figures.

Thus, between October and December of last year, the gross domestic product (GDP, the indicator that measures economic activity) increased by 0.8%, while compared to the same quarter in 2023, growth was 3.4%—finally one tenth less than the first estimate issued in January—, according to data published this Wednesday by the National Statistics Institute (INE).

These data contrast yet again with those of Europe, where the annual growth rate was 0.9% in the Eurozone and 1.1% in the European Union as a whole; that is, 2.5 and 2.3 percentage points below Spain's growth, according to Eurostat, the EU's statistical agency. Of the 27 EU states, only Poland and Lithuania recorded annual growth higher than Spain's, which, due to the size of its economy, contributed approximately 50% of European growth, according to the Ministry of Economy.

Compared to the previous quarter, growth was 0.1% and 0.2% in the Eurozone and the EU, respectively, also well below the 0.8% recorded in Spain. Thus, the Spanish economy once again demonstrated a growth capacity far superior to that of the larger EU countries. Germany maintained negative rates for another quarter (it suffered a 0.2% drop compared to the third quarter), confirming the poor health of the continent's main economy, while in the case of the other two member states with a GDP larger than Spain's, France decreased by 0.1% and Italy remained flat at 0%.

Investment and consumption drive the cart

The positive growth figures are mainly explained by the strength of domestic demand, especially household consumption and investment. Economy Minister Carlos Cuerpo described the economy's growth as "balanced, sustainable, and robust" on Wednesday, as it "is capable of continuing to generate quality employment" despite an international situation marked by "uncertainty."

Domestic demand was the main driver of growth, with household consumption increasing 3.8% compared to the last quarter of 2023 and investment 3.2% higher than a year earlier. Public administrations also contributed, with a 4% increase in public spending.

By sector, industry stands out, with a 2.7% increase in activity in one year, although if we only look at manufacturing, the figure is even higher, with a 3.7% positive year-on-year change. Services, which represent more than two-thirds of Spain's GDP, grew by 3.8% annually, and construction by 2.6%. The primary sector also closed the fourth quarter with positive figures, growing by 4.2% compared to the same period last year.

The negative figure, however, came from the foreign sector, which subtracted 0.2 percentage points from growth due to the difference between imported and exported goods and services. Despite the good performance of tourism, which in 2024 broke records for the number of foreign visitors, Spain maintained a negative balance with the outside world. Exports continued to rise, with an annual increase of 3.2%, but imports increased even more, by 4%.

Within the positive figures, Catalonia stands out with even greater growth than Spain, as confirmed last week by Idescat, the statistical agency of the Generalitat (Catalan government). In fact, last year the Catalan economy recorded a GDP growth greater than that of Madrid, with 3.6% compared to 3.3% for the region of Madrid.