Economic Report: Spain
1. General Overview
Spain is a country in southwestern Europe with a population of about 47 to
48 million people (2025 estimate). It is one of the larger economies in the
Eurozone. Its economy mixes private business, public services, and social
welfare programs. Spain benefits from sunshine, a rich cultural heritage, and
good infrastructure for tourism, trade, and manufacturing.
Spain’s nominal Gross Domestic Product (GDP) in 2024 was approximately
USD 1.8 trillion. When adjusted for purchasing power parity (PPP), its GDP
is about USD 2.6 trillion. On a per capita basis (PPP), this is roughly USD
38,000 per person. These figures place Spain among the mid to higher
income European nations.
The Spanish economy is open and connected to global markets. It
participates fully in the European Union (EU) and benefits from common
markets, structural funds, and trade agreements. EU support, such as the
NextGenerationEU recovery fund, helps Spain invest in infrastructure, green
energy, and digital transformation.
Despite strengths, Spain faces challenges such as uneven regional
development (some regions are much richer than others), high youth
unemployment, and a public debt burden. These factors influence its long-
term growth.
2. Economic Structure and Key Sectors
Services Sector
The services sector dominates Spain’s economy. It accounts for about 70–75
% of GDP. Key service industries include tourism, retail, hospitality,
financial services, transport, and information technology. Tourism is
especially important — Spain is one of the world’s top tourist destinations,
drawing millions of visitors each year. Revenue from tourism brings foreign
exchange, supports jobs, and stimulates small business.
Industry and Manufacturing
Industry (including manufacturing, construction, and utilities) contributes
roughly 22–28 % of GDP. Spain has a strong automotive sector: car firms
produce vehicles, parts, and components for both domestic and export
markets. The country also produces machinery, chemicals, pharmaceuticals,
food processing, and electronics. Renewable energy equipment — such as
wind turbines and solar panels — is a rising industrial sub-sector as Spain
shifts toward green energy.
Agriculture
Though small in GDP share (2–3 %), agriculture remains significant for
rural employment and exports. Spain grows olives, wine grapes, citrus fruits,
vegetables, and cereal crops. It is a leading exporter of olive oil, fresh fruits,
and vegetables to the EU and beyond.
Emerging and Growth Areas
Spain is investing in green energy (solar, wind, battery technologies), digital
infrastructure, biotechnology, and innovation. These growth areas are
increasingly important for future competitiveness. Also, the expansion of e-
commerce and digital services is changing the business landscape.
3. Trade and Foreign Investment
Trade Profile
Spain is a relatively open economy, meaning trade (exports + imports)
makes up a high share of GDP — around 70 %. Spain’s main exports
include machinery and transport equipment (especially vehicles and parts),
chemical products, pharmaceuticals, food and agricultural goods, and
manufactured goods. On the services side, tourism, air transport, and other
tourism‐related services are key export items.
Imports are dominated by energy (oil, natural gas), machinery and
equipment, raw materials, vehicles, and pharmaceuticals. Because Spain
lacks sufficient domestic energy resources, it depends on energy imports.
Major trade partners include France, Germany, Italy, Portugal, the United
Kingdom, and the United States. Spain also trades with Latin American
countries, particularly those with historical or language ties.
Foreign Direct Investment (FDI)
Spain attracts significant FDI (foreign direct investment). In recent years,
inflows have ranged between USD 25–35 billion per year. Investors are
particularly interested in renewable energy projects, real estate,
infrastructure, telecommunications, and manufacturing. Spanish firms also
invest abroad — especially in Latin America and within the EU. The
government supports FDI with incentives, tax breaks, and by improving
infrastructure and regulatory stability.
EU programs like NextGenerationEU also channel funds into green projects
and digitalization. These help leverage private investment in key sectors.
4. Macroeconomic Indicators (2024–2025).
Indicator Estimate / Value
GDP Growth Rate ~ 2.4 %
Inflation Rate ~ 3.0 %
Unemployment Rate ~ 11.6 %
Government Debt / GDP ~ 107 %
Budget Deficit ~ 3.3 % of GDP
Current Account Balance Slight surplus (~ 0.5 %)
Exchange Rate (2025 avg) 1 EUR ≈ 1.08 USD
5. Strengths, Weaknesses, Opportunities, and Threats (SWOT)
Strengths
Strategic location & EU membership: Spain is part of the European single
market, giving businesses access to over 400 million consumers.
Strong tourism brand: Spain is globally recognized as a tourist destination.
Renewable energy potential: Abundant sunshine and wind make Spain ideal
for solar and wind power.
Diversified manufacturing base: Spain is not overly dependent on one
industry — it has cars, chemicals, food, machinery.
Weaknesses
High public debt: Debt over 100 % of GDP limits government flexibility.
Unemployment (especially youth): Many young people struggle to find
stable, well-paid jobs.
Regional disparities: Some regions (e.g. Madrid, Basque Country) are much
richer than others (e.g. Extremadura, Andalusia).
Energy import dependence: Spain relies heavily on imported oil and gas,
which makes it vulnerable to energy price shocks.
Opportunities
Green transition & EU funds: Spain can use EU recovery funds to
modernize infrastructure, energy, and industry.
Digital economy expansion: Growth in software, IT, e-commerce, and
services offers new jobs.
Export growth: Expanding into non-EU markets (e.g. Latin America, Africa)
may boost trade.
Innovation & startups: Investing in R&D, tech startups, and university spin-
offs can drive future growth.
Threats
Global slowdown / trade tensions: Weak global demand could hurt exports.
Energy price volatility: Fluctuating energy costs can affect inflation and
production.
Demographic challenges: Aging population could strain welfare systems and
reduce workforce size.
Political instability / policy uncertainty: Frequent changes in government or
policy may deter investment.
