It’s not all doom-and-gloom: Spain’s economy slips into hyperdrive as it transforms into the poster child of Europe

Spain’s Dani Olmo (M) and Spain’s Ferrán Torres (r) cheer with the fans after winning the European Championship trophy. Photo: Tom Weller/dpa

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

The shipyards in Cadiz are working on a contract with the UK’s Royal Navy to produce parts for three new ships

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.

Spain set an all new record for foreign tourists to the country in August

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.

READ MORE: Good news and bad: Home sales in Spain ebullient in first half of year, but foreign markets off the boil, writes Mark Stucklin of Spanish Property Insight

The sprawling SEAT car manufacturing plant located in Martorell, Barcelona

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.

Spanish Prime Minister Pedro Sanchez has reasons to smile with the economic success he has overseen during his tenure

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.

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Publish date : 2024-09-28 01:00:00

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