Spain's economy outperforms euro zone in 2024 with 3.2% growth

By Inti Landauro and Marta Serafinko

MADRID (Reuters) - Spain's economy expanded 3.2% in 2024, outstripping official forecasts and far outperforming its euro zone peers, preliminary data from the National Statistics Institute showed on Wednesday.

Economy Minister Carlos Cuerpo said this week the government would raise its forecast for this year from the current 2.4% following the annual data, which was buoyed by a tourism boom as well as a strong agriculture industry and higher exports.

Economic growth should remain robust this year and next thanks to consumer spending, boosted by falling unemployment, and investment, brokerage Jefferies said in a note to investors.

Spain's unemployment rate dropped in the fourth quarter to its lowest level in 16 years, data showed on Tuesday.

Still, the rising cost of living and a housing crisis that has pushed prices through the roof in big cities has dented living standards despite the growth, head of strategy at Renta 4 brokerage Natalia Aguirre told Reuters, forecasting a slowdown in private consumption.

Analysts also point to Spain's below-par GDP per capita in Western Europe and its snail-paced growth that clocked just about 4% since 2007.

The country's economy expanded 0.8% in the last three months of the year from the previous three, the same pace as the quarter before. Analysts polled by Reuters had expected gross domestic product to grow 0.6% quarter-on-quarter.

The full-year growth rate was faster than the 2.7% projected by the government and even the 3.1% predicted by the Central Bank.

"Spain keeps leading the euro zone growth, with a GDP increase four times higher than the euro zone as a whole," Cuerpo said in a statement.

Recently both France and Germany lowered their growth outlooks for this year to 0.9% and 0.3% respectively, while Italy expects a 1.2% expansion. All three are due to release GDP data on Thursday.

Additionally, Spain's fiscal situation is better than its peers', Jefferies said, and it is less likely to suffer from U.S. President Donald Trump's plans to impose trade tariffs.

The budget deficit is set to fall this year and next thanks to higher taxes and cuts in subsidies such as the one on electricity. Spain expects to reduce its budget deficit to 2.5% this year.

(Reporting by Marta Serafinko and Jesus Aguado, editing by Inti Landauro and Andrei Khalip)