## OUR SHIFT TO SUCCESS — NATIONAL PERSPECTIVE: SPAIN

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**Canonical URL:** [OUR SHIFT TO SUCCESS — NATIONAL PERSPECTIVE: SPAIN](https://www.imf.org/-/media/files/publications/fandd/article/2025/06/cuerpo.pdf)

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### Overview
- For the first time in its modern history, Spain’s economy has come out of an international crisis stronger than it went into it.
- The shock from COVID-19 led to an 11 percent drop in economic output in 2020.
- Spain was the world’s fastest-growing major developed economy in 2024, contributing about half of the overall growth in the euro area while representing only a tenth of its GDP.
- Spain was the only major advanced economy to have its 2025 growth projection revised up by the IMF in its latest outlook, in April.
- The recovery funds for investment and reform are expected to add 3.4 percent to GDP by 2031, compared with a no-plan counterfactual scenario.
- Spain has already invested almost €50 billion in the green and digital transitions.

### Dynamic labor market
- A sweeping reform in 2021 broadened permanent hire options, underpinning strong labor market performance.
- At peak, furlough programs supported nearly 3.4 million workers; public credit lines bridged liquidity needs of over 674,000 mostly small- and medium-sized firms.
- Spain generated more new employment last year than France and Germany combined.
- Two-thirds of new workers in 2019–24 were foreign-born, mostly from Latin America.
- Job creation in high-value sectors such as information and communications technology expanded at twice the pace of overall employment over the past two years.
- Temporary employment has dropped sharply to converge with the EU average.
- The minimum wage has increased by a total of 61 percent since 2018.
- Spain has the lowest wage inequality among developed economies, according to the International Labour Organization.
- Policies such as a “minimum vital income” are contributing to greater economic equity; Spaniards are recovering their purchasing power at a faster pace than their euro area peers, according to the Organisation for Economic Co-operation and Development.

### External resilience
- Spain recorded its highest-ever balance of payments surplus last year, equivalent to 4.2 percent of GDP.
- Spain welcomed a record 84 million visitors last year.
- Non-tourism exports, including financial services, IT, and professional consulting, generated more than €100 billion last year and recently overtook tourism as a growth driver.
- Spain is not overreliant on foreign capital to finance growth, reducing the risk of dangerous financial bubbles seen in past cycles.

### Green energy, competitiveness, and investment
- Spain increased its share of electricity generated by renewable sources from just over 20 percent in 2019 to 56 percent last year.
- The central bank attributes a 40 percent lowering of electricity prices to this change in the energy mix, enhancing competitiveness, strategic autonomy, and energy independence.
- Between 2018 and 2024, Spain was the world’s fifth-largest recipient of greenfield projects, which most increase productive capacity and employment, according to the Financial Times investment tracker.

### Fiscal policy and the “fiscal sweet spot”
- Public debt has dropped by more than 22 percentage points from its peak during the worst of the pandemic in 2021, inching closer to 100 percent of GDP.
- The budget deficit is down by 7 percentage points and has fallen below the EU’s official threshold of 3 percent for the first time in six years.
- Fiscal discipline has reinforced market confidence, reflected in record demand for sovereign bonds, contained credit costs, and a string of credit rating upgrades.
- Fiscal responsibility has been pursued alongside protection of the welfare state to maintain social acceptance of reforms.

### Policy priorities, reforms, and remaining challenges
- Recovery funds and reforms have modernized and decarbonized the economy, bolstering growth and employment.
- Implemented measures include reducing red tape, enhancing the business environment, improving digitalization and innovation, promoting the green transition, and reinforcing social protection.
- Remaining priorities:
  - Continue reducing unemployment.
  - Improve training opportunities and align them with business needs.
  - Lower inequalities and promote equitable opportunities for all.
  - Solve the housing challenge to ensure access to affordable homes, especially for young people.

### Key statistics (as reported in the source)
- 11 percent: drop in economic output in 2020 due to COVID-19.
- 3.4 million: workers supported at peak by furlough programs.
- 674,000: firms aided by public credit lines.
- 2019–24: period during which two-thirds of new workers were foreign-born.
- 61 percent: total increase in the minimum wage since 2018.
- 3.4 percent: projected contribution of recovery funds to GDP by 2031 (relative to no-plan counterfactual).
- €50 billion: almost invested in the green and digital transitions.
- 56 percent: share of electricity generated by renewable sources last year.
- just over 20 percent: share of electricity generated by renewable sources in 2019.
- 40 percent: reduction in electricity prices attributed to the change in the energy mix.
- 4.2 percent of GDP: highest-ever balance of payments surplus last year.
- 84 million: visitors welcomed last year.
- more than €100 billion: non-tourism exports last year.
- more than 22 percentage points: decline in public debt-to-GDP ratio from its pandemic peak in 2021.
- closer to 100 percent: current public debt-to-GDP level (described as inching closer).
- 7 percentage points: reduction in the budget deficit.
- 3 percent: EU official deficit threshold, which Spain’s deficit has fallen below for the first time in six years.
- fifth-largest: global ranking for Spain as recipient of greenfield projects between 2018 and 2024.

*Carlos Cuerpo is Spain’s minister of economy, trade, and business.*

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_Source: https://www.imf.org/-/media/files/publications/fandd/article/2025/06/cuerpo.pdf_