There are many misconceptions about Spain. Most Spaniards, for instance, never take siestas. Sangria is not the country’s favourite drink. And almost no one regularly attends bullfights.
Arguably the biggest misconception of all – one which many newspapers, politicians, and even economists have recently fallen victim to – is that Spain’s economy, the EU’s fourth-largest, is “booming”. According to numerous key metrics, including productivity growth, unemployment, and (most tellingly) surveys of the country’s actual citizens, it isn’t.
But that’s not what the most commonly used economic measure says. In fact, the scores of articles hailing Spain’s “miracle” economy are overwhelmingly based on the fact that the country’s GDP – the total value of its produced goods and services – is rapidly increasing.
Compared to other EU countries, it is true that Spain’s GDP growth has been extraordinario in recent years. CaixaBank, the country’s largest domestic lender, reported earlier this week that Spain’s output has risen 10% since 2019, well above the eurozone average of 6.4% and a whopping one hundred times more than Germany’s anaemic 0.1% expansion.
The swift growth also shows little sign of subsiding. Earlier this month, the European Commission and the Bank of Spain both hiked their Spanish growth forecasts for this year to 2.9% – more than double the EU’s 1.4% average projected expansion. “Real GDP growth is expected to remain strong in 2025,” the Commission noted, adding that “economic activity” is also expected to “remain robust” until 2027.
But as José Boscá, an economist at the FEDEA think tank in Madrid, points out, Spain’s GDP data “is not so promising” when adjusted for its population growth, which has also swelled in recent years. “If we only assess economic growth based on GDP data, there are factors that we are not taking into consideration,” Boscá said.
Indeed, Spain’s GDP growth is largely a direct consequence of its growing population. Soaring immigration – especially from Latin America – has caused Spain’s overall population to surge in recent years, and, predictably, has also caused its total output and consumption to rise.
According to the Elcano Institute, Spain’s immigrant population has risen by roughly 600,000 people per year since the end of the pandemic, pushing its population to a record high of just under 50 million. Roughly one in five people now living in Spain were born abroad.
In addition to boosting net output, the influx of workers has boosted government revenue and, by tempering wage rises, has helped keep inflation barely a fraction above the European Central Bank’s 2% target rate.
But it has also exacerbated Spain’s chronic shortage of affordable housing and compounded the country’s cost-of-living crisis – especially for young people, the vast majority of whom still live with their parents and a quarter of whom are currently unemployed. According to the latest available data from Eurostat, the average Spaniard only leaves home at the age of 30: well above the bloc’s average of 26.
The wave of immigration has also made it increasingly difficult for Spain to reduce its overall rate of joblessness, which at 10.45% remains the highest in the EU. Nine in ten jobs created between January 2024 and March 2025 were filled by foreign workers, the Elcano Institute notes.
Such factors explain why Spain’s economic “miracle” is overwhelmingly not being felt by its citizens. A recent poll by the Funcas research centre revealed that 55% of Spaniards think that the economic situation is worse than before the pandemic, while 90% believe they have lost purchasing power.
Luz at the end of the tunnel?
Immigration is not the sole reason for Spain’s rapid growth rate. A surge in post-pandemic tourism is also a major factor, as is the country’s broader shift toward high-value-added service sectors, including real estate, finance, and IT.
“It’s not just tourism, it’s also non-tourism services,” Finance Minister Carlos Cuerpo told CNBC earlier this year. The fact that Spain’s €100 billion in annual non-tourism export services now exceeds its €95 billion in tourism exports also underscores the “modernisation of the Spanish economy,” he said.
