Spain will continue to be “the engine” of the eurozone in 2024 due to the impact of tourism on the country’s economic growth this year, but the long-term future is “more uncertain,” Sergi Basco, associate professor of economics at Barcelona University, told Xinhua in an interview on Tuesday.
On the same day, the International Monetary Fund (IMF) forecast that Spain’s economy will grow 1.7 percent next year. Last month, the European Commission projected growth to reach 2.2 percent in 2023, three tenths of a point more than its previous estimate in May and over double the forecast for the whole eurozone which stands at 0.8 percent.
The faster-than-expected growth this year is mostly attributed to the return of foreign tourists. In August, at the height of the holiday season, Spain hosted 10.1 million foreign visitors, 13.9 percent more than in the same month in 2022, according to government figures.
“If we look at growth in terms of domestic demand, which is how much people consume, and external demand, which is the services people from abroad buy, then we see that most of the growth is due to tourism, which is returning to pre-pandemic levels,” Basco said.
Yet, the professor warned that Spain will have to rely more on domestic spending to continue growing next year, which aspects such as continued high interest rates, rising mortgage payments and costly credit make uncertain.
“For growth to continue, even more tourists will have to come but it seems we are reaching our limit and so next year the external demand will not grow so much, and added to that, next year the rebound effect from the pandemic will be over,” he said.
While the IMF predicts continued — albeit more moderate — growth for Spain next year, it estimates that the growth figure will still be far higher than that of the country’s European neighbors, such as Germany’s (0.9 percent) and France’s (1.3 percent).
However, Basco also warned against setting too much store by economic forecasts, especially if taken out of context.
“In the end, forecasts generate optimism or pessimism, and it depends on the interests of who makes them, whether the government or a bank, they want to generate optimism so that people will spend money or the opposite if people see that the forecast is negative,” he said.