How tourism is leading Spain’s economic boom ...Middle East

Spain’s post-pandemic tourism boom is a major reason why it has far outperformed its eurozone peers.

The Spanish government said the economy expanded by 3.2 per cent last year and it hopes to raise its forecast for this year.

The surging growth was led by tourism and a strong output in agriculture and higher exports, analysts said.

Last year, 94 million tourists visited Spain, 10 per cent more than in 2023.

The Economist magazine ranked Spain as the world’s best-performing economy in 2024, out of 37 world economies.

In contrast, the UK grew by an expected 0.9 per cent, France by 1.1 per cent and Italy by 0.5 per cent. The German economy contracted by 0.2 per cent.

Economic growth should remain robust this year and next thanks to consumer spending, boosted by falling unemployment and an increase in investment, observers said.

Immigration helped Spain plug skills gaps and reduce its unemployment to 10.61 per cent, its lowest level in 16 years.

Adriana Montesdeoca, whose family run a farm in Tenerife which has proven an unlikely draw for tourists who see how the goat’s milk is produced, said sunshine, safety and a lower cost of living were drawing people to Spain.  

“People feel that they can get more for their money out here. The other thing that you cannot control is sunshine so its nicer than those cold northern countries,” she told The i Paper.

Tara Scarlata manages three tourist bars in Tenerife and her company is about to open a fourth.

“I think after Covid-19, people wanted to get out and have some fun. People want to get away from their day to day,” she said.

However, Ms Scarlata said the rising cost of living in Spain made it harder for staff to afford housing in the Canary Islands.

Brexit meant British people could no longer get summer jobs in Spain, said Ms Scarlata, as they were limited to spending only 90 days in every 180 in the European Union.

Paul Clavers, chief travel officer with online travel booking company eDreams ODIGEO, said 2025 could be another record year for Spanish tourism.

“Travellers are increasingly looking for flexible and personalised options and technology continues to revolutionise the way we plan and enjoy trips,” he added.

Sunbathers enjoy 23°C in Spain's south as February turns unusually warm

Despite the booming tourism sector, Spain has been hit by a series of protests by residents who believe holiday flats have pushed up the price of housing beyond the reach of local people.

Last month, the Spanish government unveiled proposals to introduce a 100 per cent tax on property for buyers who are non-EU citizens and non-residents.

Housing has become a major issue in Spain as it struggles to balance promoting tourism, a key driver of its economy, with concerns over high rents due to gentrification and landlords shifting to more lucrative, short-term tourist rentals, especially in urban and coastal areas.

Analysts expect the Spanish economic boom to continue this year and next.

“This momentum has been based on three main drivers: private consumption, record tourism and strong job creation, mostly thanks to immigration,” said Javier Molina, an analyst with eToro.

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