The Spanish economy managed to maintain a robust growth rate until Q3 2024 despite multiple headwinds, including weakness in the eurozone economies, persistently high inflation and the impact of past interest rate hikes. Behind this good performance are several key factors, including the solid performance of the labour market, continued high immigration and positive international tourism data, which once again exceeded expectations and explains external demand's strong contribution to growth in H1. Private consumption is taking over from growth and has been picking up for the last three quarters. On the other hand, although investment is increasing, absolute figures are lacklustre.

Based on Q3 data, we are upgrading our GDP growth forecasts to 3.1% for 2024 and 2.4% for 2025. We expect domestic demand to take over as the driver of growth. The smaller contribution from foreign demand will likely be more than offset by a gradual pick-up in both private consumption and investment.