Gross Domestic Product (GDP) grew by 0.8 percent in the last quarter of 2024 compared to the previous quarter and by 3.5 percent compared to the same months of 2023 (year-on-year change), the INE also announced.

The growth of the Spanish economy last year was mainly due to domestic demand (consumption and investment), which contributed 2.8 percentage points to the increase in GDP, while external demand (exports and imports) contributed 0.6 points.

On December 2024, the Bank of Spain improved its economic growth forecasts for 2024 and 2025 by three tenths, estimating increases in Gross Domestic Product (GDP) of 3.1 percent and 2.5 percent respectively.

The improvement in the Bank of Spain's forecasts - in line with what the Spanish government itself and international organisations have been doing in recent weeks - is due to the good performance of activity in the second half of 2024, especially private and public consumption.

The Spanish central bank pointed out that GDP growth in 2024 and 2025 is essentially based on domestic demand and, above all, private consumption, due to the positive evolution of disposable income, the labour market, household confidence and the expected increase in the population.

Investment, which remains the weakest component of domestic demand, will also increase its contribution to Spanish GDP growth in the coming quarters, driven by the implementation of European funds and better financing conditions (credit), according to the Bank of Spain.

As for inflation, the central bank maintained its latest forecasts of 2.9 percent for 2024 and 2.2 percent in 2025.

Last November, the European Commission (EC) also improved its outlook for Spain's GDP.

The EC predicted growth of 3 per cent in 2024 and now estimates that Spain's GDP will grow by 2.3 per cent this year.

Spain's growth is due to consumption, ‘underpinned by the continued resilience of the labour market, and the strengthening of investment’, according to the European Commission (EC).

The growth estimates for Spain are higher than the forecasts for the European economy as a whole.

In November, the European Commission forecast GDP growth in the eurozone of 0.8 per cent in 2024 and 1.3 per cent in 2025.

For the 27 member states of the European Union (EU) as a whole, the Brussels forecast was 0.9 per cent growth in EU GDP in 2024 and 2.5 per cent in 2025.