Spanish Economy Minister Carlos Cuerpo said that after the publication of strong economic data for the first half of 2024, namely on unemployment, investment and tourism, the government revised its forecasts for GDP growth for the current and next years. The economy is now expected to expand by 2.4% this year (+0.4% compared to the previous forecast) and by 2.2% in 2025 (+0.3% compared to the previous forecast).
In the first quarter, Spain's economy outperformed its main peers within the European Union, underscoring the strength of the eurozone's fourth-largest economy. Final data published by the National Statistics Institute (INE) showed that the economy expanded by 0.8% in the 1st quarter, exceeding economists' forecasts (+0.7%), and accelerating compared to the 4th quarter (+0.7%). It marked the strongest growth rate since the 2nd quarter of 2022. Meanwhile, in annual terms, GDP grew by 2.5% after an increase of 2.1% in the 4th quarter. Consensus estimates suggested economic growth of 2.4%.
The European Commission predicts that Spain's GDP will grow by 2.1% in 2024 and 1.9% in 2025, driven by domestic demand and sustained by continued labor market resilience. Meanwhile, the International Monetary Fund forecast that GDP growth will reach 2.4% in 2024 and 2.1% in 2025, driven primarily by stronger domestic demand growth.
Cuerpo said that given the updated forecasts for GDP growth, the government now expects the budget deficit to fall to the equivalent of 3% of GDP this year and continue to shrink in 2025.