Executive summary
Having expanded above the EU average in recent years, Spain is developing as an economy in new and exciting ways.
SPAIN HAS MADE AN IMPRESSIVE RECOVERY in the aftermath of the impactful 2007 financial crisis that stagnated the real estate and construction market and resulted in a record-level unemployment rate that peaked around 26%. In terms of its recovery since then, the growth of the Spanish economy has been impressive, as it has expanded above the EU average in recent years. However, at the end of 2019, its forecasts for growth were lowered as a result of 2Q2019 growth being the weakest in the last three years.
Despite this, investment in the nation is still impressively high. The sheer number of strong industries contributing to Spain’s GDP attests to its commitment to continued economic growth through diversification and internationalization. The nation today remains one of the EU’s core members, as well as being a significant player in the NATO alliance and the Mediterranean region.
Tourism is an especially notable industry as in 2018 it overtook construction as the largest contributor to Spanish GDP, then estimated around 15%. The sector’s focus looking ahead is on sustainability and determining the right balance between the revenues tourist arrivals bring and coping with the many people entering cities in terms of mobility and housing, amongst other things. These issues were often addressed in our discussions with the tourism sector, ranging from government agencies to private actors, including major hotels and attractions such as Casa Batlló and Poble Espanyol.
A more recent area of development in the nation is in the technology sector, which has seen huge growth over recent years, with cities like Barcelona and Madrid becoming hubs for tech start-ups. This represents Spain’s conscious effort to put itself on the map as a hub for innovation and technology. Perhaps the project gaining most attention, both nationally and globally, is the Catalan regional government’s 5G project that is currently underway in collaboration with various private sector companies. The implications of the project for future economic growth is far reaching in that multiple sectors, including healthcare, are sure to benefit from such developments.
All in all, the future of the Spanish economy looks promising. However, the real challenge will be to make these changes more well known outside of Spain by increasing its diplomatic presence internationally. Another area of concern will be the domestic political situation that has seen much uncertainty over the last few years in terms of both Catalonia’s growing demands for independence, as well as the conservative party’s corruption scandal that shook the nation’s governmental structure, resulting in years of a hung parliament. A clearer political future will be sure to make the economy grow as initially expected. ✖