Spain Economic Outlook. October 2024

Summary

GDP growth forecast for 2024 is raised to 2.5% thanks to the good performance of external demand, the increase in the labor force, and the execution of Recovery Plan funds. However, it will moderate to 2.1% in 2025, largely due to constraints in tourism growth.

Key points

• Key points:
• Global growth will moderate in the coming quarters and recover in 2025. In the US, growth is revised upward for 2024, but a moderation remains likely. In the Eurozone, the cyclical recovery will gain momentum. In China, despite better data and stimulus, structural challenges will limit growth.
• The Spanish economy has performed better than expected three months ago, driven by services exports, improvements in competitiveness, labor force growth and Recovery Plan funds.
• The increase in interest rates has not been passed on proportionally to the cost of financing, and fiscal policy may be somewhat more expansionary than expected.
• External demand will be negative due to constraints in tourism. Investment in transport and housing faces short-term obstacles and domestic demand will be affected in 2025 by fiscal adjustment.
• All this in an environment of high uncertainty about the future of economic policy, both nationally and globally.

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