Spain is the eurozone's fourth largest economy, after Germany, France and Italy. In less than fifty years it has moved from a mainly agricultural, closed economy to a modern, open one dominated by services, with some large multinational companies and a strong presence in Latin America.
From boom to crisis
After the end of Francoism, and above all after joining the European Community in 1986, Spain grew dizzyingly, fuelled by European funds, foreign investment, tourism, infrastructure and liberalisation. In the 1990s and early 2000s GDP grew faster than the European average and unemployment fell from 22% to about 8%. But growth rested largely on construction and easy credit: in 2008 the bursting of the property bubble caused a deep recession, with unemployment above 25% (see the 2008-2012 crisis and problems in the property sector).
The recovery
From 2014 the economy grew again, driven by exports, tourism and greater competitiveness. After the pandemic, which in 2020 made GDP plunge by more than 10%, Spain had one of the strongest recoveries in Europe: in 2025 GDP grew by 2.8% according to the INE. Employment has passed 22 million workers, an all-time record, and the 2022 labour reform has greatly reduced the share of temporary contracts.
Sectors
- Tourism: the engine of the economy, at over 12% of GDP. In 2025 Spain welcomed almost 97 million foreign tourists, mainly British, French and German, and it is the world's second destination after France.
- Industry: Spain is Europe's second largest car producer after Germany, with plants of Seat-Volkswagen, Renault, Stellantis and Ford, and has major industries in food, chemicals, pharmaceuticals, fashion (the Inditex group, owner of Zara, is the world's largest clothing group), aerospace and construction.
- Farming: Spain is Europe's market garden. It is the world's largest producer of olive oil, with about 40-50% of global output, mainly in Andalusia, and one of the leading producers of wine, citrus fruit, fruit and vegetables, also grown under plastic, as in Almería's mar de plástico. It is also a major power in fishing and pig farming.
- Energy: Spain is among Europe's leaders in renewable energy, with large solar and wind plants producing over half the country's electricity.
- Banking and services: big groups such as Santander, BBVA, Telefónica, Iberdrola and Repsol operate worldwide, especially in Latin America.
The Achilles heel
The weak point remains the labour market: unemployment, down to around 10%, is still among the highest in the European Union, and youth unemployment exceeds 20%. Wages are relatively low, productivity grows slowly and the cost of housing weighs on young people and families (see Spain today and cost of living). Other problems are public debt, around 100% of GDP, and sharp imbalances between rich regions such as Madrid, the Basque Country, Navarre and Catalonia and poorer ones such as Andalusia and Extremadura. For those wanting to work or invest, see working in Spain and starting a business.