The Spanish economy completed 2024 with impressive economic growth. Although a slight deceleration of GDP growth is expected in 2025, Spain should continue to deliver very solid economic performance compared to the Eurozone average, thanks to lower interest rates, a healthy labour market and less trade exposure to the U.S.
Key takeaways:
- The Spanish economy closed 2024 with GDP growth of 3.2%. Private consumption continues to be the main growth engine, supported by strong employment and lower interest rates, which have increased household disposable income and boosted the savings rate. A slight deceleration is expected in 2025.
- Although the Spanish economy has a low direct trade exposure to the U.S. (only 4% of exports), the indirect impact can be high, given the strong trade links with Europe.
- The strong growth of the Spanish economy, however, masks some remaining challenges linked to the real estate market, lack of investment and less fiscal consolidation than expected during recent years.
- High economic growth has made Spanish assets increasingly attractive to foreign investors. The strong weight of banking – one of our favourite sectors – in the Ibex 35 should maintain this positive trend this year.
