Spain’s tourism sector has solidified itself as a cornerstone of the nation’s economy, contributing significantly to GDP growth and job creation. In 2024, the country welcomed a record-breaking 94 million international visitors, marking a 10% increase from the previous year and surpassing pre-pandemic levels. This influx generated approximately €126 billion in revenue, a 16% rise compared to 2023, demonstrating tourism’s pivotal role in Spain’s economic resurgence. The sector now accounts for 12.3% of Spain’s GDP, contributing to nearly 70% of the growth that the country is experiencing, according to tourism group Exceltur.

Spain has successfully capitalised on tourism for economic growth, setting it apart from other major European destinations like France and Italy. Although France remains the world’s top tourist destination, welcoming over 100 million visitors annually, its tourism revenue is comparatively lower in relation to its GDP. While France attracts more tourists overall, Spain earns significantly more per visitor (€126 billion against €68.6 billion for France), as a higher percentage of its tourism revenue comes from international travellers rather than domestic tourism.

This surge in tourism has put increasing pressure on Spain’s infrastructure, prompting significant modernisation efforts to accommodate growing visitor numbers. Investments in high-speed rail networks, airport expansions, and digital transformation initiatives have enhanced visitor experiences, making Spain a welcoming destination for international travellers. Indeed, the Spanish government plans to allocate a record $3.8 billion to improve tourism destinations and businesses across the country, representing the largest investment of this kind in the country so far.

Spain’s economic resurgence has been fuelled by a surge in Foreign Direct Investment (FDI), making it one of Europe’s most attractive destinations for international capital. Unlike many European economies struggling with stagnant growth, Spain’s combination of investor-friendly policies, strong economic fundamentals, and sectoral diversification has enabled it to stand out as a top-performing economy. The influx of FDI has been concentrated in energy, technology, and data infrastructure, reinforcing Spain’s role as a strategic hub for innovation. Favourable tax incentives, a well-developed transport network, and government-backed initiatives to attract multinational corporations have further enhanced its appeal. Additionally, Spain’s commitment to digitalisation and green energy transition has made it a preferred location for investors seeking long-term returns in sustainable industries.

Spain’s recovery from the financial crisis and subsequent debt challenges has been marked by rising investor confidence and structural reforms that have increased competitiveness. According to UNCTAD’s World Investment Report 2024, despite a 20% decline in FDI inflows in 2023, totalling USD 35.9 billion, Spain remains the 10th-largest recipient of FDI globally, outperforming several European counterparts.

One of the key areas attracting foreign capital is renewable energy, where investment is growing at over 25% annually. This shift aligns with Spain’s strategic move away from traditional sectors like real estate and toward sustainable industries, reinforcing its position as a European leader in green energy. The country is now the fourth-largest global contributor to scientific production in the biotechnology sector, further strengthening its innovation ecosystem. Spain has become a powerhouse in green hydrogen production, with Iberdrola, Repsol, and Enagás spearheading large-scale hydrogen hubs in Andalusia, Aragón, and the Basque Country. At the same time, the country is rapidly expanding its solar and wind energy capacity, adding 5.8 GW of solar power and 4.3 GW of wind energy this year, making it the second-largest solar market and third-largest wind energy producer in Europe. These investments are not only reducing Spain’s reliance on fossil fuels but also positioning it as a future energy exporter within Europe, particularly as demand for clean energy rises across the continent. Additionally, Volkswagen’s €10 billion gigafactory in Valencia and Envision’s €2.5 billion battery manufacturing plant in Navarre have positioned Spain as a key player in energy storage, which is essential for stabilising the growing renewable energy supply.

Spain’s economic expansion has been supported in part by a steady influx of immigrants, who have helped meet labour market demands and sustain population growth. In the third quarter of 2024, Spain’s foreign-born workforce grew by 9.1% year-on-year, compared to just 0.6% for native workers. This increase has played a crucial role in reducing unemployment, which now sits at its lowest level since the 2008 financial crisis. Immigrants have become an essential component of Spain’s workforce, filling critical roles in industries such as construction, healthcare, and technology. Their presence has mitigated labour shortages, particularly in sectors struggling to attract local workers. Moreover, the growing immigrant population has contributed to consumer demand, boosting retail, housing, and public services.

While immigration has played a crucial role in supporting Spain’s labour market and economic growth, it has also heightened competition for housing and social services. This has exacerbated Spain’s housing crisis, particularly in cities like Madrid and Barcelona, where rental prices have surged due to high demand and a shortage of affordable housing. In response, the government has introduced rental caps in high-demand areas and allocated €4 billion for public housing projects, aiming to stabilise prices and improve accessibility. However, critics argue that these measures may not be sufficient to address long-term structural imbalances in the housing market.