“The Economist” chose Spain as the best economy of the OECD group last year. The southern country, still often associated with the financial crisis and high unemployment, beats other most developed economies. This is clearly visible in economic data. For example, the latest manufacturing PMI readings give Spain the highest reading of all European countries surveyed.
Spain wins in PMI
A reading of 53.3, clearly above 50 points, means primarily that the industry is developing there. And it has been like this for almost a year. Meanwhile, many EU countries have not been able to break beyond this limit for many months. Poland is also in this group and has been scoring less than 50 points (in December it was 48.2 points) for 22 months, a record-breaking time. It's still nothing compared to Germany. In the case of Poland, the industrial sector sees some positive signs, with our neighbors from the west border there is not much optimism in sight.
The index itself fell in Germany in December to only 42.5 points, and companies production companies report a decline in production, new orders and employment. “After two and a half years of deteriorating business conditions in the manufacturing sector, this trend may end in the second half of 2025. By then, Germany should have a new government and the current wait-and-see approach to investment and consumption may change. However, finding confirmation of this Thesis in numbers is difficult,” write S&P Global analysts who create the PMI index.
In France, the second largest EU economy, the PMI for manufacturing is even lower – it fell to 41.9 points from 43.1 points in November and is the lowest by 55 months.
Energy, stupid!
And Spain is exactly on the other side of the ranking. “Spain is showing resilience to the European weakness in the manufacturing sector, also at the end of the year. While other European countries are struggling with serious crisis consequences, such as mass layoffs, factory closures and a collapse of investment, Spain is experiencing growth in its manufacturing sector. This can be attributed to extensive energy supply and relatively low export dependence on China. Spain's industrial production is expected to increase overall in 2024, unlike other major eurozone countries,” he commented. report on PMI Jonas Feldhusen, junior economist at Hamburg Commercial Bank.
Ignacy Morawski, chief economist of “Puls Biznesu”, drew attention to the issue of energy, emphasizing that it is simply cheap in Spain, one of the cheapest in the EU. “Ten years ago, the average price of electricity for companies in Spain was the same as in other EU countries, five years ago it was 5% lower, and now it is 30% lower. For comparison – in Poland the trend is exactly the opposite. Ten years ago we had energy 30% cheaper than the EU average, five years ago it was 15%, and now it is 15% more expensive,” he wrote in his commentary.
Similar conclusions come from the analysis of the Polish team of Credit Agricole economists. They noted that production in Spain increased strongly in industries with high energy demand. Low energy prices there result primarily from the diversity of sources. The country produces it extensively from renewable energy sources – sun, wind, water, it has nuclear power plants, as well gas from Algeria. This meant that Spain was not hit as hard by the energy shock that Russia inflicted on Europe before the outbreak of the war in Ukraine.
But that's not all. Credit Agricole experts pointed out that three other industries in Spain are responsible for the better industrial results than in other large economies: “production of computers, electronic and optical products”, pharmaceuticals and “production of other transport equipment” (railway and aviation). They are developing very dynamically there, and the government even recently announced a separate strategy for pharmacy. Labor migration helps, which in the case of Spain concerns largely people from Spanish-speaking countries (South America), which facilitates the integration of migrants into the labor market.
And one more factor: tourism. Last year, 94 million foreign tourists visited Spain, a record high. Tourism provides 12.3 percent. The country's GDP. However, this is a double-edged sword. Crowds of visitors are fueling the housing crisis, sparking protests and provoking remedial action. Both local authorities (e.g. short-term rentals) and central authorities – the government plans to impose drastic tax on real estate buyersbeing from outside European Union.
Top in the OECD
In the third quarter of last year, Spain's GDP increased by 3.4%. year to year. This is the highest number in the entire European Union (in Poland, GDP growth was 2.7 percent.). GDP growth is one of the elements taken into account by “The Economist” when creating its list. The rest are: results stock exchangesinflation, unemployment and fiscal situation. The British magazine drew attention to the renaissance of the countries that were the main characters of the European debt crisis from over a decade ago, once called PIIGS (from the first letters of their English names: Portugal, Italy, Ireland, Greece, Spain – Portugal, Italy, Ireland, Greece, Spain ). Ireland came second in the ranking, followed by Denmark in third place, and then Greece and Italy.
For the entire year 2024, the Spanish economy is expected to grow by 3.1%. This is what the International Monetary Fund reported in its January update, increasing its previous forecast by 0.2 percentage points. Poland is expected to record 2.8 percent. growth. This year the order is to be reversed. Our GDP is expected to accelerate significantly and increase by 3.5%, and Spain's GDP will slow down to +2.3%.
We wrote a little more about this in this text: Poland beats Germany and France. New data on the economy leave no doubt