The country’s GDP has moved into the positive territory.
The Ryanair flight from London to Castellón-Costa Azahar is bustling with energy. A young British couple stands at passport control, dreaming of remote work and a new life in Spain. It’s hard to believe that this Valencian airport, built for €150 million, once lay empty from 2011 until its first flight in 2015. For years, it symbolized wasteful spending after the global financial crisis, earning the nickname “airport to nowhere” from critics. But now, Castellón is set to surpass 300,000 passengers this year and boasts 14 regular European routes. “It’s vital for the province,” said Vicente Martinez Mus, Valencia’s infrastructure minister.
From Brokair, a Spanish aircraft maintenance company, to eCube, a Welsh firm specializing in dismantling aircraft, business is thriving. “Here, planes get a second life,” said Miguel Ruiz, eCube’s head of carpentry. “We don’t throw anything away – like with cerdos (pigs),” joked Jordi Ruiz, the airport’s spokesperson.
Castellón’s turnaround reflects Spain’s broader economic recovery, which is outpacing Europe. In 2024, Spain’s GDP grew by 3.2% to €1.6 trillion, while Germany saw a contraction (-0.2%) and France had modest growth (1.1%), according to Eurostat. “Though Spain represents just 10% of the Euro area, it contributed 50% of its total growth,” said economy minister Carlos Cuerpo.
Spain’s economic success is credited to a robust labor market, resilient exports, and foreign investment. Tourism, which reached record levels, now accounts for 12% of GDP. With 94 million visitors – nearly double Spain’s population – the country has extended tourism revenue into shoulder seasons, not just summer. “Tourism has shifted from ‘revenge’ growth to sustainable demand,” said Jaume, CEO of hotel chain Meliá, referring to a shift beyond pent-up travel from the pandemic. He expects bookings to rise in the low double digits for 2025.
But tourism is not Spain’s only strength. In 2024, non-tourism service exports (€100 billion) outpaced tourism (€95 billion). Services, including banking, telecoms, and IT, now account for 67% of GDP, while industry makes up 16%. While construction still lags behind pre-crisis levels (6% of GDP vs. 12-13% before the housing bubble), its growth potential remains. The government deficit has dropped from 10% post-pandemic to 3% in 2024. However, Spain’s growing economy brings challenges, such as how to boost defense spending. Currently contributing just 1.28% of GDP to NATO, reaching the target of 2.5% will become more expensive as the economy expands.
For labor minister Yolanda Díaz Pérez, Spain’s growth is partly attributed to immigration. In 2023 alone, more than 170,000 people moved to Spain from South America. “It’s vital to our economy and society,” she said, referencing labor reforms and a new employment law that prioritizes training for migrants. As a result, immigrants filled 70% of new jobs in two years. “Immigration is our superpower,” said Miguel Cardoso, chief economist at BBVA. “And we’re managing it with little tension.”
Spain’s labor market is more stable than ever. Temporary contracts in the private sector have dropped from 27% to 12.4%, and there are a record 15.7 million permanent workers, suggesting the economy is generating enough jobs to absorb new arrivals. Wages, stagnant since 2009, finally reached European averages in 2019. Spain’s minimum wage in 2025 reached €1,184 a month, up 4.4% from 2024, marking a 61% increase since 2018 – a rise faster than the 23% average wage increase. This benefits 2.4 million workers, mostly women and young people. Unemployment fell from 15.3% in 2018 to 10.6%, though still above the EU average.
“That might seem high, but we’re at record employment levels – 22 million working,” Díaz Pérez noted. Youth unemployment, while decreasing, still stands at 24%. Cardoso cautions that rising labor costs and pension reforms could deter investment, but Díaz Pérez disagrees: “Those who say higher wages hurt businesses are wrong. Employment is at record highs, productivity is rising, and our economy is stronger than ever.”
Spain’s early investment in renewable energy is also paying off. Domestic energy production increased from 20% in 2019 to over 50% in 2024, lowering electricity prices by 40% and bringing them below the EU average. Spain’s focus on local energy production, especially in rural regions like Extremadura, is attracting electric vehicle battery factories and even a synthetic diamond project backed by Leonardo DiCaprio.
Spain managed to avoid the worst of the energy crisis sparked by the Ukraine war by importing gas from Algeria, North America, and the Gulf, and holds a third of Europe’s gas infrastructure capacity. Infrastructure investment surged since 2015, reaching €30 billion in 2024, partly due to grants from the €160 billion EU recovery fund. Spain is also a leader in high-speed rail, according to Alejandro Jimenez, head of infrastructure strategy at construction firm Acciona. Jimenez notes that Spain’s shape has made connections easier: “It’s a question of geography.” Now, he’s focused on water desalination, believing “infrastructure drives economic growth and social mobility.”
However, Spain faces a significant challenge in housing. The sudden demand for affordable homes in Valdeluz highlights the housing shortage. Madrid, a bustling capital, has seen quality of life improve in vibrant neighborhoods like Chueca and Malasaña, but rising costs and a housing shortage remain pressing issues.
With an average salary of €40,000, Madrid is more affordable than London, where wages are higher, but housing costs are 2.8 times more expensive. Housing remains a government priority in its upcoming budget, with plans to create a public company to manage rentals, streamline regulations, and offer guarantees for long-term leases. “We cannot let housing become a speculative asset,” Díaz Pérez said, stressing the need for radical intervention. Spain faces a 500,000-unit housing shortfall, with new households (200,000 annually) outpacing construction (100,000).
Social housing provision, at 1.5 million units, lags behind the European average. Andrés Pan de Soraluce, CEO of Acciona’s real estate division, sees potential in converting obsolete office spaces into homes.
Can Spain avoid the mistakes of the past, such as the housing bubble collapse after the financial crisis? “In 2008, leverage was the norm. Now, households have historically low debt, and firms maintain it at under 20% of asset value, compared to 80% then,” said David Martínez Montero, CEO of housebuilder AEDAS Homes. “The shock was brutal, but it forced a shift in mindset.”
Christian Muñoz, an Ecuadorian living in Madrid for 23 years, works two jobs as an Uber driver and in a restaurant. “Even with two jobs, buying a house is still a dream,” he said. As Spain celebrates its economic growth, it will need to ensure that people like Muñoz, the backbone of its economy, are not left behind.
