The Spanish economy beyond tourism

Diversification is being driven by EU funding and tax incentives. Climate change and rural depopulation are still major challenges.

Understanding Spain’s GDP

Spain’s GDP will grow 3.2% by 2024. This is higher than the previous projections, and it will lead all of Europe in terms of growth.[1]. The real GDP growth rate is projected to be around 2.6% in 2025, and about 2.0% in 2026. This will be supported by robust consumption at home and by 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. The nominal GDP is approximately $35,100 and the PPP is $53,400[3].

The GDP is made up of three main sectors – services (about 75%), industry (22%), and agriculture (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

Solar and battery storage are the two main renewables that Spain has a high potential for. It ranks fourth in Europe’s expected growth in the next five years. 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 is responsible for 2.7% of the GDP. However, employment in agriculture is slightly higher (3.5%). Spain is the EU leader in grapes, olive oil, strawberries, and wine. Farmers face structural challenges, including drought, rising 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.

In the meantime, academic studies point to chronic groundwater depletion throughout southern Spain. Factors behind this are irrigation‑intensive subtropical farming, exacerbated by governance gaps and insufficient enforcement of water quotas.

Overview of Spain’s Economy

Spain’s economy continues to diversify, moving beyond tourism. This is a result of a strong domestic market, EU-backed investments, and strategic industries like renewables and semiconductors. Solar and hydrogen energy are expanding quickly under the large subsidies from both the EU and state.

Agriculture is vital. It accounts for just under 3% GDP. But it faces pressures from climate change, population loss, and scarcity of water. These are mitigated by CAP flexibilities and direct EU and national aid.

Also read: Spain’s Economy Gains Pace Despite Global Headwind