Spain and Portugal leave the crisis behind: now they are the fastest-growing economies

The Future of Europe: Spain and Portugal Leading the Way

In the upcoming year of 2024, Europe is set to grow at two different speeds, with a surprising twist on which countries will lead the pack.
Spain and Portugal are poised to drive the European Union’s recovery, finally overturning their position as the tail-enders of the old continent’s economy.

2023 GDP data and expectations for the current year are crystal clear: the two countries have left behind decades of crises and sky-high debt levels, aiming for a growth around 2% that outshines a struggling Germany and a France just added to the list of EU countries under scrutiny for excessive deficit.

The Spanish Economic Miracle

The recent macroeconomic events and data testify the excellent health of Spain’s economy: the country has avoided entering the excessive deficit procedure of the EU by targeting to reduce its deficit to 3% by 2024.

This plan is supported by an economic growth exceeding expectations, estimated at 2.5% this year, after surpassing predictions and showing a 0.8% growth in the first quarter of 2024.

According to the recent S&P Global Eurozone Economic Outlook Q3 report, Madrid is not only showcasing a post-pandemic tourism normalization but also an expanding industrial production.

An excellent restart of services, a tax reform favoring higher revenues from the wealthier segments, a successful energy mix less dependent on Russian gas, and government actions to support vulnerable citizens have been success factors, coupled with measures to stimulate demand and consumption, boosting economic growth.

For 2025, the EU forecasts a +1.9% GDP growth in Spain.

The Portuguese Comeback

After closing 2023 with a 2.3% growth, Portugal is expected to register a notable recovery in 2024.
The EU Commission has predicted a 1.7% increase for this year’s GDP, with an even better performance in 2025 (+1.9%).

In addition, in 2023, public debt fell below 100% of GDP (it was at 98.7%), and a high budget surplus was recorded, the highest since the fall of the dictatorship in 1974.

Analyses highlight that the Portuguese economy is experiencing a golden moment thanks to exports and tourism reaching record levels: 2023 was the best year in history with over 30 million visitors and €25 billion in revenue.

While the Portuguese economic turnaround has started, there are still many economic challenges to face.