Deborah Cater
Spain is often defined by its thriving tourism sector, but the country’s economy is far broader and increasingly dynamic. With one of Europe’s fastest growth rates in 2024 and a GDP exceeding €1.6 trillion, Spain is reshaping its economic profile through green energy, advanced technology, and new investment strategies.
EU funding, tax incentives, and structural reforms are driving this diversification. However, challenges such as climate change and rural depopulation remain.
Understanding Spain’s GDP
In 2024, Spain’s economy grew by 3.2%, surpassing earlier projections and leading the eurozone in growth[1]. Real GDP growth is expected to moderate to about 2.6% in 2025 and 2.0% in 2026, supported by robust domestic consumption and investment supported by EU funds[2].
As of 2025 estimates, Spain’s nominal GDP stands at approximately $1.715 trillion USD, or about €1.6 trillion, making it the world’s 12th largest economy. GDP per capita is roughly $35,100 nominal and $53,400 PPP[3].
GDP is composed of three main sectors: services (about 75% of value added), industry (22%), and agriculture (2.7%)[4].
EU Recovery Funds & Subsidies
Under the EU’s Next Generation EU framework (2021–2027), Spain will receive nearly €155 billion, including €59 billion via the Recovery and Resilience Facility and €12 billion via REACT‑EU[5].
Spain is also a leading recipient of European Investment Bank (EIB) financing: in 2024, €12.3 billion flowed in, mobilising nearly €45 billion in total investment, around 3% of GDP.
Notably, six out of every ten euros financed the green transition, with over €5 billion earmarked for energy sector investments alone[6].
Green Energy Surge: Solar & Hydrogen
Spain boasts high potential in renewables; it ranks 4th in expected growth across Europe in the coming five years, led by solar and battery storage. In July 2024, the government approved €794 million in subsidies for seven green hydrogen projects. This enabled a combined 652 MW of electrolysis capacity and leveraged €6 billion in total investments. Spain is also targeting expanding hydrogen electrolyser capacity to 11 GW by 2030, up from an earlier goal of 4 GW.
Beyond hydrogen, Spain’s green energy plan includes a €2.3 billion initiative to support renewables, agriculture, infrastructure, and rural communities in their green transition.
Agriculture: Challenges & EU Support
Agriculture contributes about 2.7% of GDP, though employment share is slightly higher (~3.5%). Spain leads EU production in olive oil, wine, citrus, and strawberries. Still, farmers face structural challenges: drought, rising production costs, rural depopulation, and wildfires.
In mid‑2023, Spain secured €81 million in EU agricultural crisis reserve support (the largest share among EU states) to help drought‑affected livestock and crop sectors. National emergency aid contributed a further €2.19 billion, with about €636 million allocated directly to farmers and stockbreeders.
Meanwhile, academic studies highlight chronic groundwater depletion in southern Spain. Factors behind this are irrigation‑intensive subtropical farming, exacerbated by governance gaps and insufficient enforcement of water quotas.
Summary of Spain’s economy
Spain’s economy is steadily diversifying beyond tourism, anchored by strong domestic demand, EU-backed investment, and strategic sectors like renewables and semiconductors. Green energy, particularly solar and hydrogen, is expanding rapidly under large state and EU subsidies.
Agriculture remains vital, at just under 3% of the GDP, but is under pressure from climate stress, depopulation, and water scarcity, mitigated in part by CAP flexibility and direct aid from both national and EU sources.
Also read: Spain’s economy gathers pace despite global headwind