Spain's economic landscape has shifted dramatically over the past decade, transitioning from having the highest unemployment rates in Europe to becoming a leading growth economy.

This turnaround has been significantly influenced by the rebound in tourism following the COVID-19 pandemic.

According to Spain's Minister of Economy, Carlos Cuéllar, "Spain continues to lead growth in the Eurozone with GDP expansion rates four times higher than the EU average."

International recognition of this economic success was underscored in December when Spain was named the country with the best economic performance outlook for 2024 in The Economist's ranking of 37 OECD member countries.

This assessment was based on five macroeconomic and financial criteria, including GDP, stock market performance, inflation, unemployment, and fiscal balance.

The publication highlighted Spain's GDP growth, noting that it is the fourth-largest economy in the Eurozone, benefitting from a stable job market and high rates of immigration that contribute to economic production.

According to data released by Spain's National Statistics Institute in the previous month, GDP is projected to grow by 3.2% in 2024, while Germany, the largest economy in Europe, is expected to contract by 0.2%.

France and Italy, the next largest economies, are forecast to experience modest growth rates of 1.1% and 0.5%, respectively.

The revival of Spain's economy has largely hinged on the tourism sector, which recorded a historic influx of 94 million visitors last year, generating 126 billion euros in revenue.

This recovery is notable, given the severe downturn during the pandemic.

Elena Mirón, a tour guide in Madrid, remarked on the turnaround, stating, "There was a point during COVID when I thought tourism would never return to its former levels, but now the situation is very good, and I believe this year will be prosperous, similar to 2023 and 2024."

In 2023, the tourism sector accounted for over 12% of Spain's GDP, which increased to 13% the following year.

However, the economic improvement is attributed to more than just tourism.

A report from investment firm Jefferies published in January noted that additional contributions to the economy, such as private consumption, rising investments, and positive immigration trends, have also played crucial roles in boosting economic performance.

eToro analyst Javier Molina stated in a client document that the current momentum in the Spanish economy is underpinned by three main drivers: private consumption, record tourism, and job creation, primarily supported by immigration.

Spain has seen one of the highest immigration rates in Europe, predominantly from Colombia, Morocco, Venezuela, and Peru.

Between January 1 and November 15, 2024, over 54,000 immigrants entered the country, marking a 15.8% increase from 2023. In November, the Spanish government approved a reform to offer residency and work permits to around 300,000 undocumented immigrants annually for the next three years.

This program, set to commence in May 2025, is part of the government's efforts to expand the workforce in light of an aging population.

According to Minister for Integration, Security, and Immigration, Élisabeth Saiz, Spain requires approximately 250,000 foreign workers each year to maintain its welfare state status.

Prime Minister Pedro Sánchez has similarly cited immigration as a strategy to address low birth rates.

In the final quarter of 2024, the unemployment rate fell to its lowest level since 2008, recorded at 10.6% compared to 11.2% in the previous quarter.

The National Statistics Institute also indicated that Spain added 468,000 new jobs in the past year, over 90% of which were in the service sectors due to the tourism boom.

This contrasts sharply with the situation in 2013 when unemployment peaked at 26.3%, twice the EU average.

Currently, the number of employed individuals in Spain reaches a record 22 million, a figure bolstered by labor market reforms that have increased restrictions on temporary contracts.

Spain's economic recovery has been facilitated in part by COVID-19 recovery grants disbursed by the European Union.

Spain is slated to receive 163 billion euros in grants by 2026, the highest amount among Eurozone countries, alongside Italy.

The government plans to invest these funds in upgrading the national railway system, developing green areas in major cities and tourist destinations, boosting the electric vehicle industry, and providing subsidies for small businesses.

Given the positive economic indicators, the government has revised its growth forecast for the coming year to exceed 2.5%.

According to Minister of Finance María Jesús Montero, the budget deficit is expected to decrease to around 3% of GDP this year, continuing to decline in subsequent years.