Spain and Portugal lead economic growth in the eurozone, but a slowdown is expected in 2025

 

The Spanish economy has surprised with a growth of 3,2% in 2024, far exceeding initial forecasts and leading the growth of the eurozoneHowever, by 2025 a slowdown to 2% is expected, according to the forecasts of the Hispanic-Portuguese Chamber of Commerce and Industry In collaboration with Santander Bank and Abanca.

 

The analysis presented at the IV Edition of the Economic Outlook: Spain, Portugal and the European Union highlights the role of tourism, immigration, the foreign sector and public spending as drivers of Spanish growth in 2024.

 

López-Barrón Choir, executive director of the Hispanic Portuguese Chamber of Commerce, opened the event by highlighting the importance of creating a meeting point to analyse common economic issues between Spain and Portugal.

 

"In 2024, the Spanish economy grew twice as much as expected (3,2% vs 1,5%), leading growth among the eurozone countries, where the increase was 0,8%," he highlighted. Pedro Veiga, general manager of strategic planning of Abanca.

 

Among the main reasons, Veiga He highlighted the development of tourism (+10% higher than in 2023), the arrival of foreign population (and its positive effect on the labor market and the natural balance), the boost of foreign sector, as well as the increase in public spending (which represents 19,6% of GDP) and the rise in the savings rate.

 

Looking ahead to 2025, Veiga predicted “a more moderate growth of 2%"He pointed to the housing crisis, high unemployment and stagnation in productivity as the main weaknesses that the economy must overcome this year. 

 

As for the Portugal, a more moderate growth is expected in 2024, at 1,6%, below its potential. However, its economic diversification and the stability of its labor market are noteworthy.

 

“Portugal, with sustained and diversified economic growth based on labor productivity, which provides great stability to the labor market, with an explicit commitment to public investment, but with a firm commitment to consolidating public finances, is favorably positioned and more resilient to current potential shocks and uncertainties,” he stated. Esther Cases, senior economist at Banco Santander.

 

At the European level, a "soft landing" is expected and a recession is avoided, according to Concepcion Sanz, director of Banco Santander's service. However, geopolitical uncertainty is setting the course for the economy in 2025, which requires boosting investments, digitizing and modernizing the industry.

 

In 2024, according to Sanz's analysis, the dynamics have changed and it is now southern Europe that leads the growth of the eurozone, when traditionally this position corresponded to the north.The growth of the external sector and adjustments in fiscal policies will cause a readjustment in several countries, such as France, where measures have been less restrictive. In this context, and to ensure sustainable growth, it is key to promote strong investments, digitalize and modernize the industry, as the Draghi report points out,” Sanz warned.