Spain's Economic Growth in 2025 Driven by Historic Population Increase and Structural Shifts

Spain's economy is experiencing remarkable growth in 2025, largely fueled by significant demographic changes and an evolving economic model. The population reached a historic high of 49.9 million in the third quarter of 2025, an increase of 105,488 people—mainly driven by foreign-born residents who now total 9.8 million. Economist Luis Garicano highlighted that over the past three years, Spain's population has expanded by 1.6 million people, primarily due to an influx of 1.9 million foreign-born individuals, offsetting a decline of 300,000 births among Spanish nationals. Birth data from 2024 also underscores this trend, with 318,005 births recorded, 25.6% of which were to foreign mothers, up from 24.4% in 2023.

This population growth coincides with a broader transformation of Spain's economic structure. The country's GDP growth outpaces many advanced economies in 2025, with unemployment hovering slightly above 10%—levels reminiscent of 2008 but underpinned by a more resilient and diversified economy. The traditional reliance on construction has diminished, with employment in that sector dropping from over 12% in 2008 to under 7% today. Meanwhile, tourism remains vital, contributing nearly 12% to employment and GDP, bolstered by a swift recovery post-pandemic and projections nearing 100 million international visitors in 2025.

Spain's financial system is notably stronger and better regulated since the 2008 crisis, enhancing economic stability. Despite these advances, challenges such as persistent structural unemployment, low productivity, housing access difficulties, and low wages remain. Experts, including the OECD, suggest leveraging the current economic upswing to reduce public debt and build resilience against future downturns.

Overall, demographic growth driven by foreign-born populations combined with strategic economic diversification positions Spain for a more robust economic future. Luis Garicano emphasized that population growth is a main driver behind Spain’s positive economic trajectory this year, signaling demographic trends as pivotal to the country’s economic revival.