Spain and Portugal will continue to shine this year
We expect the Spanish and Portuguese economies will continue to be clear outperformers within a struggling eurozone this year. Spain and Portugal have also reduced their long-standing, macro-financial vulnerabilities. An improved demographic outlook also means we are more optimistic about Spain and Portugal’s long-term growth than other peripheral economies.
What you will learn:
- Spain was the world’s fastest-growing major economy last year. Portugal endured a soft patch in mid-2024 but ended last year on a strong footing. Growth is being driven by some common factors, such as the services-oriented nature of both economies, booming tourism sectors, and strong net migration flows. But there are also key differences in terms of growth drivers.
- Favourable cyclical expansions were accompanied by major structural developments. The large current account deficits that were typical in the 2000s have turned into surpluses, contributing to a sharp reduction in the external debt. Meanwhile, private debt has also been falling steadily. Portugal’s fiscal performance also stands out as one of the best within the eurozone.
- Recent developments also underpinned upgrades to our long-term forecasts for both countries. We now expect Spain and Portugal will grow at a similar pace as the eurozone over the next decade, whereas previously we thought they would be among the worst performers, along with other Southern European economies such as Greece and Italy.
- But we still forecast little further convergence towards eurozone per capita income levels for Spain and Portugal. The prevalence of low value-added jobs keeping productivity low and protracted weak investment will be key factors holding back their long-term outlook.

Tags:
Related Services

Post
Spain: Regional growth driving the house price boom
House prices are booming in Spain. A combination of strong demand and supply-side constraints has placed significant upward pressure on prices in recent years, and this will likely remain the case in the near term.
Find Out More
Post
Eurozone: Pension system sustainability hinges on unpopular reforms
Increased spending to meet the needs of an ageing population jeopardises the sustainability of Europe's public pension systems, based on current legislated measures.
Find Out More
Post
A window of opportunity edges open for real estate
Our Global Relative Return Index (RRI) is unchanged from six months ago at 52.7 for 2025, signalling that we are still on course for a sustained pick-up in investment opportunities after the initial phase of the recovery this year.
Find Out More
Post
How Canada’s wildfires could affect American house prices
The Northern Hemisphere is now heading into the 2024 fire season, having just had its hottest winter on record. If it is anything like last year, we can expect to see further impacts on people, nature, and global markets.
Find Out More