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Without foreign tourism, GDP in Spain would have fallen
Foreign tourism is significantly bolstering the Spanish economy, and without it the GDP would have dropped by 0.2%
The Bank of Spain’s latest macroeconomic forecasts, published this Tuesday June 11, highlighted that the positive economic activity in the country has largely been driven by tourism. There was a notable influx of tourists, they said, with a greater diversification of destinations and higher average spending per tourist.
The Bank of Spain had predicted a 0.4% GDP increase for the first quarter, but the actual growth was a robust 0.7%. This discrepancy was primarily due to an unexpected surge in foreign tourism. Without the spending from foreign visitors, the economy would have seen a 0.2% contraction at the beginning of 2024.
GDP growth in Spain in the first quarter of the year was mainly propelled by exports and, to a lesser extent, by domestic demand, but within the external sector, international tourist spending was seen as the key contributor, adding nine-tenths of a percentage point to GDP growth.
Despite this, a recent survey found that 45% of Spanish people believe the government should place limits on the number of tourists. entering the country to combat the problems related with overtourism.
Before the pandemic, the contribution of foreign tourism expenditure to GDP growth in Spain was modest. However, post-pandemic, it has surged, albeit with large fluctuations between quarters.
Despite this volatility, the underlying trend is clear: tourism remains a crucial driver for the Spanish economy and is currently experiencing a boom. Total spending by foreign visitors between January and April this year is 50% higher than during the same period between 2016 and 2019.
Overnight stays in tourist accommodation are 14% above this benchmark, and Spain now receives 400,000 more German and 400,000 more French tourists compared to the pre-pandemic years analysed. The Canary Islands and Andalucía have seen an increase of 1.4 million visitors over pre-Covid levels.
These figures indicate that the 2024 season might surpass the all-time spending record set last year. Households in the Euro area continue to prioritise holidays, with 45% planning to spend on vacations in the next 12 months, outpacing other expenses such as household goods, cars and housing.
The surge in foreign tourism also impacts prices, particularly contributing to service inflation, which remains high both in Spain and across Europe. This indicator is still above 3% year-on-year and has barely decreased this year. The Bank of Spain estimates that one-third of service inflation is due to the prices of catering and tourist activities.
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