How Spain Became the IMF’s Favourite European Economy

Like a lot of Southern Europe, Spain is experiencing a relative economic boom as its growth forecast outpaces most major European countries. So in this video, we'll dive into the data, explain why this is happening and whether this can be sustained.

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[TLDRnewsEU]

UPDATE: Since we wrote and animated this video, Spain's Prime Minister Pedro Sanchez has announced he's considering resigning, blaming a “harassment and bullying operation” by his political opponents after a court launched a corruption investigation into his wife. This doesn't really affect or undermine the gist of the video, but at 4:25 we do describe Sanchez as a political "survivor", which now looks, well, a bit silly, even if it's still sort of true. Anyway, we hope you enjoyed the video nonetheless!

[Lxz]

In Spain today it’s difficult to progress. Salaries are low compared to supermarket prices, rents, housing, construction materials, cars and anything else. Young people over 25 still have to stay in our parents' house because we don't have money to rent or buy a house, a car (not even a second-hand one) and start a family. Spaniards are increasingly having fewer children and later. Everyone wants to be a civil servant because it’s the only way to have economic stability. There are too many taxes on everything and for self-employed people who have their own businesses there are even more. So that, added to the tedious bureaucracy, makes everything more and more obstacles to starting a business, so fewer and fewer people do it or leave the country.

[MrBlackgobbo]

The median salary (not average, median) is 19k €/year. The cost of renting a house in big cities are between 750€ (if you're lucky) and 1600 €. So regular population is struggling with cost of living.

[Jonathanat]

The reason is simple: Spanish economy got hit the hardest with covid, if you compare it to growth from other countries before the pandemic to the expected this year you will see that the accumulated growth of spain is low

[kaanyasin]

The growth is basically rebuilding the 2010s era economics. Growth at rock bottom is growth but nobody calls your economy strong

[mariaandres]

Well, as a young person living in Spain. I can tell you much of our hardworking youth earns 20-25k in their first job, with little prospects of an increase. 32k is seen as a good salary here. And day to day expenses are not that much cheaper than countries like Germany.

[sxxrpientes]

We are just growing more than other EU countries because we were the ones who suffered the most in 2020, our GDP fell more than 11, 2% and didn't reach pre-pandemic numbers until the third trimester of *2023*, which is crazy bad compared to the rest, that not only suffered less economic and humanitarian impact but also achieved economic recovery in half of the time we took.

[TobiasStarling]

Mental that economists never clocked that not letting people get paid more would reduce economic growth. If it wasn’t for nepotism these guys wouldn’t even exist

[ezBlu.]

Spaniard here. Yes, recent growth has been big, but because we were one of the worst performers during covid, still falling behind were we once were. Growth statistics, while true, can be decieving without a proper context

[Menelvagorothar]

It never ceases to amaze me, how after all the evidence of the faults of GDP as a development metric and especially after all the talk about sustainability, how still we cannot start using any other measure of development than GDP itself. On topic - you forgot to mention that Spain already has one of the most decarbonized energy sectors already. Plus still a huge rate of youth unemployment, which could be well exploited in an era, when workforce is getting scarce. I wish all the best for Spain!

[caleciric]

Can you not lower the jingle volume?
Volume is unbalanced

[Lawlietho]

As a Spaniard I can tell you the economy is definitely not booming.
And I have huge doubts it is even growing.

[rozkaz]

Poland with 3% - I am nothing to you ?

[pabol]

Look, I'm 23, earning minimum wage in a European country other than Spain, I will be going back to spend the next year in Spain for personal reasons, but I am just going to study and do internships as there is no incentive for me to work, the salary is way to low, renting a bedroom too expensive, inflation will catch up with whatever I try to make anyway, and at least by studying I can improve my future conditions whenever I'm able to leave Spain again. I am lucky I can live with my parents, otherwise I could not afford to pay for my studies and a place to live with all of my savings, much less with what I would make working.
As sad as it makes me, Spain's economy will not be growing anytime soon, neither will politicians take care of the younger generations, as it isn't electively interesting (huge amount of pensionists in Spain), nor people that struggle to create businesses and grow the economy.
I have already seen how other European countries allow their youths to independently live, that's why I am encouraging my sister, relatives, friends and girlfriend, as well as whomever asks me about moving out, as none of the dozens of friends I met here are coming back, even though we deeply miss Spain.
By the way, we are not upper class, we all have different backgrounds, come from different places, most of us still struggle financially and have to work and study, as well as learn a foreign language, but believe me, we know we won't be going back to Spain for as long as we can avoid it.
Spain doesn't and won't have opportunities for us.

[kokorospirit]

Huge unemployment and lots of spanish engineers working abroad. That has not changed at all for the last 30 years.

[Fallingstar-yyiv]

Immigration of high and mid skill labor from Central and South America. They have the skill, provide a tax base to cover pensioners and they already speak the language. But their is a bonus. Cultural compatibility. These immigrants actually fit into Spanish society well. Truth is they would fit into any European country pretty well. The surrounding nations should take note and try to encourage the same immigrants into their countries.

[pabloperez]

The two reasons why the Spanish economy (where I live) has grown are the rebump of tourism, which was expected, as a consequence of the pandemic, and the Next Generation EU funds (accounting for more than half of that growth of 2%). The only reason the deficit has fallen relatively to GDP is because of inflation, as the goverment has actually increased the deficit in absolute numbers. But inflation won't help anyomre in the coming years. If you remove the tourism growth (which has nothing to do with the government) and the funds from the EU, the economy has actually fallen. The rise in wages are really nice to those who do have a job, but that rise is a consequence of jobs being destroyed elsewhere, as more restrictive policies lead to a destruction of jobs. Moreover, the government has enacted no policies that have been effective at reducing the unemployment rate. A more careful and profound investigation of the causes behind Spain's "boom" should be taken, rather than giving the public an insubstancial approach that does not really enquire into the real situation of us the Spaniards.

[cristoux]

Spanish economist here. There is no strong growth in Spain. The current growth is just late recovery from the covid. It would have been very useful to show indexed level of real GDP for the last decade in Spain. It is clear that we didn't recovery the 2019 Q4 level of economic activity until 2023 Q3. More than 3, 5 years with 0 growth!! Only to have a mediocre growth from that point onwards. Not to mention that tax revenue has increased 30% over that period, and so did government spending so we are still in a budget deficit!! And prices increased far more than salaries. We are in a far worse situation than our comparables, we have nothing to brag about.

[bernardoguardiolaruiz]

I’m Spanish and I don’t think Spain is doing that great… I’m not going to call it “fake news” because I respect that channel.

[louaceveu]

Several factors for the Spanish growth. The enormous emigration of highly qualify expats from the Americas. Business men, investors, professionals (Many graduated in USA universities) fleeing the populists government and policies that are ruining the continent. A lot of hard working people willing to take any jobs that many Spaniards don't want to take (Unacceptable the unemployment figures when many Americans get a job as soon as they arrive). The incredible efforts that many Spanish companies are doing to increase their exports all over the world. The internet connection and digitalization of the whole country (It is the best connected internet country in the whole Europe). An incredible infrastructure (Considered by many the best in Europe), the biggest high speed train routes in all Europe and finally the output of renewable energies which is 53% of the output of the country with a promising future of 70% by 2030 (It could reach a 75%) Everybody talks about the tourism (It does help) but it is only 13% of the GDP of the country. I was the whole month of April there and in my region (Asturias) everything was booked up. Restaurants, coffee shops, bars everything it was packed. I would like to know where the people get the money to sustain that life style.