Economic and Political Overview

flag Spain Spain: Economic and Political Overview

In this page: Economic Outline | Political Outline | COVID-19 Country Response


Economic Outline

Economic Overview

For the latest updates on the key economic responses from governments to address the economic impact of the COVID-19 pandemic, please consult the IMF's policy tracking platform Policy Responses to COVID-19.

Spain has been in the midst of a balanced economic recovery in recent years; however; the COVID-19 crisis led the country into an unprecedented downturn in economic activity in 2020, with the deepest contraction among EU member states. Nevertheless, despite the fact that containment measures still in force dragged down the economy in the first half of 2021, Spain’s GDP is estimated to have grown 5.7% over the year (IMF), with tourism-related activities supporting the recovery and private demand as the main growth driver. Spain is set to continue growing in 2022 (6.4%) and to return to its pre-pandemic level by the beginning of 2023. The EU Recovery and Resilience Plan (RRP) is expected to boost both public and private investment, as household consumption should remain strong over the forecast period.

Spain’s public finances deteriorated swiftly as a consequence of the COVID-19 pandemic and of the measures taken to contain its impact: in 2021, the general government deficit stood at 5.1% of GDP. As most measures will gradually phase out, from 2022 the deficit should start following a downward trend (4.4% of GDP this year and 4.3% in 2023). Conversely, after increasing by almost one-fourth in 2020 (to 119.9%), the debt-to-GDP ratio rose only marginally in 2021 (120.2%) and is expected to float around 116% over the forecast horizon, thanks to sustained economic growth and the containment of total current expenditure. Amid rising energy prices, headline inflation stood at 2.2% in 2021, despite some measures adopted by the government (including reduced VAT rates). The slack in the Spanish labour market should help to contain wages and inflationary pressures, thus inflation is expected to moderate to 1.6% this year and to slow further to 1.4% in 2023 (IMF forecast).

Existing short-time work schemes were reinforced to offset the COVID-19 crisis; however, the pandemic widened inequalities in the labour market, with disruptions among young, low-skilled, and temporary workers being particularly harsh. Nevertheless, both the number of workers and the unemployment rate have roughly recovered to their pre-pandemic levels. The latter stood at 15.4% in 2021 but is expected to decline to 13.9% in 2023. Spain remains a country with strong inequalities: according to the latest data by the Spanish Statistical Office, 26.4% of the population was at risk of poverty or social exclusion in 2020, up by more than 620,000 individuals in one year as a repercussion of the pandemic-induced crisis.

Main Indicators 20202021 (e)2022 (e)2023 (e)2024 (e)
GDP (billions USD)
GDP (Constant Prices, Annual % Change) -
GDP per Capita (USD) 2730292931
General Government Balance (in % of GDP) -5.4-4.3-4.5-4.2-4.3
General Government Gross Debt (in % of GDP) 120.0118.6113.6112.1110.1
Inflation Rate (%) -
Unemployment Rate (% of the Labour Force) 15.514.812.712.312.1
Current Account (billions USD) 10.5613.15-2.42-3.52-1.51
Current Account (in % of GDP) 0.80.9-0.2-0.2-0.1

Source: IMF – World Economic Outlook Database, Latest available data

Note: (e) Estimated Data


Main Sectors of Industry

Agriculture contributes around 3.1% of Spanish GDP and employs 4% of the workforce (World Bank, latest data available). The country is home to almost one million agricultural and livestock businesses, covering 30 million hectares of land. Spain is the world's largest producer of olive oil and the world's third-largest producer of wine. The country is also one of the largest producers of oranges and strawberries in the world. The main crops are wheat, sugar beet, barley, tomatoes, olives, citrus fruits, grapes and cork. Livestock is also important, especially for pigs and cattle.

The industrial sector accounts for 20.4% of GDP and employs one-fifth of the active population. Manufacturing is the most important industry as it accounts alone for around 11% of GDP (World Bank). The industrial sector is dominated by textiles, industrial food processing, iron and steel, naval machines, and engineering. New sectors such as outsourcing of electronic components production, information technology, and telecommunications provide high growth potential. The renewable energy sector is also growing at a fast pace.

The tertiary sector contributes 67.8% of GDP and employs 76% of the active population. The tourism sector is pivotal for the country’s economy, being Spain’s main source of income (although its contribution to GDP fell from a pre-COVID level of 12.4% in 2019, to only 5.5% in 2020 - INE), as the country is the second-most popular tourist destination in the world (83.7 million tourists in 2019, before the pandemic started). The banking sector is also important and is composed of twelve banking groups which include 51 private banks, 2 saving banks and 60 cooperative banks (Spanish Banking Association).

Breakdown of Economic Activity By Sector Agriculture Industry Services
Employment By Sector (in % of Total Employment) 4.0 20.4 75.5
Value Added (in % of GDP) 3.1 20.4 67.8
Value Added (Annual % Change) 4.3 -10.4 -11.5

Source: World Bank, Latest available data.


Find more information about your business sector on our service Market Reports.

Indicator of Economic Freedom


The Economic freedom index measure ten components of economic freedom, grouped into four broad categories or pillars of economic freedom: Rule of Law (property rights, freedom from corruption); Limited Government (fiscal freedom, government spending); Regulatory Efficiency (business freedom, labour freedom, monetary freedom); and Open Markets (trade freedom, investment freedom, financial freedom). Each of the freedoms within these four broad categories is individually scored on a scale of 0 to 100. A country’s overall economic freedom score is a simple average of its scores on the 10 individual freedoms.

World Rank:
Regional Rank:

Economic freedom in the world (interactive map)
Source: Index of Economic Freedom, Heritage Foundation


Business environment ranking


The business rankings model measures the quality or attractiveness of the business environment in the 82 countries covered by The Economist Intelligence Unit’s Country Forecast reports. It examines ten separate criteria or categories, covering the political environment, the macroeconomic environment, market opportunities, policy towards free enterprise and competition, policy towards foreign investment, foreign trade and exchange controls, taxes, financing, the labour market and infrastructure.

World Rank:

Source: The Economist Intelligence Unit - Business Environment Rankings 2020-2024


Country Risk

See the country risk analysis provided by Coface.


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Political Outline

Current Political Leaders
King: Felipe VI (since 19 June 2014), hereditary
President of the Government and Prime Minister: Pedro Sanchez (since June 2018), Spanish Labour Socialist Party
Next Election Dates
Senate: November 2023
Congress of Deputies: November 2023
Current Political Context

The minority government led by the Spanish Socialist Workers' Party secretary Pedro Sanchez with the support of Unidas Podemos managed to secure the passage of the 2022 budget legislation in November 2021. Over the year, the political climate has been tense due to the ongoing COVID-19 pandemic and to the results of the regional elections in Catalonia, which saw pro-independence parties gaining a majority of the votes for the first time in an election, increasing their parliamentary majority, showing how the unresolved Catalan autonomy remains a pivotal issue. In a bid to start a productive dialogue, the Spanish government decided to formally pardon nine Catalan separatists who were convicted over the failed independence bid in 2017.

Main Political Parties
In the autonomous regions, several parties form coalition governments to garner more power. The December 2015 elections put an end to the two-party system. The main parties in the last elections held in November 2019 were:

- Spanish Socialist Workers Party (PSOE): centre-left, a democratic socialist party and the second oldest party
- People’s Party (PP): centre-right, sometimes referred to as the 'popular party'
- Vox: right-wing, Spanish Nationalist party
- Podemos ('We can' in Spanish): left-wing anti-austerity, born in 2014 and gaining traction
- Ciudadanos (Citizens' party - C’s): centrist to centre-right, liberalism.

Other significant political forces include:

- Republican Left of Catalonia- Catalonia Yes (ERC-Catsi): centre-left, catalan independentism
- Basque Country Unite (EHB): left-wing, Basque independentism
- Canarian Coalition (CC-PNC): centre- to centre-right, Canarian nationalism.

Type of State
Spain is a constitutional monarchy based on a parliamentary democracy.
Power is highly decentralized; the autonomous communities have a high level of legislative, executive and fiscal autonomy.
Executive Power
The King is the Head of the State and the commander-in-chief of the army; his role is mostly ceremonial. Following legislative elections, the leader of the majority party or the majority of the coalition is appointed Prime Minister by the Sovereign then elected by the parliament for a 4-year tenure. The Prime Minister is the head of the government. He is also called the President of the Government. He holds executive power which includes the execution of the law and the management of the routine affairs of the country. The Council of Ministers is appointed by the king on the recommendation of the Prime minister. There is also a Council of State which enjoys the role of the supreme consulting body of the government, but its recommendations are not binding.

The President of each Autonomous Community is from the majority party of the majority coalition winning elections of the Parliaments of the Regions which take place every 4 years. The President forms a government whose «ministers» are appointed under the title «consejeros» and seconded by a cabinet and director generals, etc. who are in charge of each Department heading the sectors for which the Autonomous Community has jurisdiction in substitution of the Spanish State (single administration).

Legislative Power
The legislative power is bicameral. The Parliament, called Cortes Generales, is made up of:
- The Senate which has 265 seats. Its role is that of representing the territories (Autonomous Communities and Departments). 208 senators are elected by proportional representation for 4 years. 57 senators are elected by parliaments of the 17 autonomous communities.
- Congress of Deputies which has a minimum of 300 seats and a maximum of 400 (currently 350). The deputies are elected by universal suffrage for 4 years from departmental constituencies. There are allotted one minimum representation and the remaining is proportional to their population. To avoid splitting up which is harmful to the stability of the Chamber, the D’Hondt system is applied.
The executive wing of the government depends directly or indirectly on the parliament's support, often expressed by a vote of confidence. The legislative power belongs to the government and the two houses of parliament at the same time. The Prime Minister does not have the authority to dissolve the parliament directly, but he can recommend its dissolution to the king. The Spanish citizens enjoy considerable political rights.
The 17 Autonomous Communities also have a legislative power exercised by their unicameral Parliament within the limit of jurisdictions fixed by each of their statutes.

Indicator of Freedom of the Press


The world rankings, published annually, measures violations of press freedom worldwide. It reflects the degree of freedom enjoyed by journalists, the media and digital citizens of each country and the means used by states to respect and uphold this freedom. Finally, a note and a position are assigned to each country. To compile this index, Reporters Without Borders (RWB) prepared a questionnaire incorporating the main criteria (44 in total) to assess the situation of press freedom in a given country. This questionnaire was sent to partner organisations,150 RWB correspondents, journalists, researchers, jurists and human rights activists. It includes every kind of direct attacks against journalists and digital citizens (murders, imprisonment, assault, threats, etc.) or against the media (censorship, confiscation, searches and harassment etc.).

World Rank:

Indicator of Political Freedom


The Indicator of Political Freedom provides an annual evaluation of the state of freedom in a country as experienced by individuals. The survey measures freedom according to two broad categories: political rights and civil liberties. The ratings process is based on a checklist of 10 political rights questions (on Electoral Process, Political Pluralism and Participation, Functioning of Government) and 15 civil liberties questions (on Freedom of Expression, Belief, Associational and Organizational Rights, Rule of Law, Personal Autonomy and Individual Rights). Scores are awarded to each of these questions on a scale of 0 to 4, where a score of 0 represents the smallest degree and 4 the greatest degree of rights or liberties present. The total score awarded to the political rights and civil liberties checklist determines the political rights and civil liberties rating. Each rating of 1 through 7, with 1 representing the highest and 7 the lowest level of freedom, corresponds to a range of total scores.

Political Freedom:
Civil Liberties:

Political freedom in the world (interactive map)
Source: Freedom in the World Report, Freedom House


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COVID-19 Country Response

COVID-19 epidemic evolution
To find out about the latest status of the COVID-19 pandemic evolution and the most up-to-date statistics on the COVID-19 disease in Spain, please visit the Spanish government platform with the official data. Official information on the progress of the epidemic in Spain is consolidated by the Carlos III Health Insitute (ISCIII), which provides a daily epidemiological update and key national figures.
For the international outlook you can consult the latest worldwide data in the daily situation reports published by the World Health Organisation as well as the global daily statistics on the coronavirus pandemic evolution including data on confirmed cases and deaths by country.
Sanitary measures
To find out about the latest public health situation in Spain and the current sanitary measures in vigour, please consult the Spanish Ministry of Health platform Info COVID-19 including the up-to-date information on the containment measures put in place and public health recommendations.
Travel restrictions
The COVID-19 situation, including the spread of new variants, evolves rapidly and differs from country to country. All travelers need to pay close attention to the conditions at their destination before traveling. Regularly updated information for all countries with regards to Covid-19 related travel restrictions in place including entry regulations, flight bans, test requirements and quarantine is available on TravelDoc Infopage.
It is also highly recommended to consult COVID-19 Travel Regulations Map provided and updated on the daily basis by IATA.
The US government website of Centers of Disease Control and Prevention provides COVID-19 Travel Recommendations by Destination.
The UK Foreign travel advice also provides travelling abroad advice for all countries, including the latest information on coronavirus, safety and security, entry requirements and travel warnings.
Import & export restrictions
For the information on all the measures applicable to movement of goods during the period of sanitary emergency due to the COVID-19 outbreak (including eventual restrictions on imports and exports, if applicable), please consult the portal of the Spanish Ministry of Industry, Trade and Tourism, and the section COVID-19 Customs on the Tax Agency website.
For the updated overview of the introduced trade import and export restrictions and other trade measures (ex. tariffs reductions) due to COVID-19 pandemic, please consult the section dedicated to Spain on the International Trade Centre's COVID-19 Temporary Trade Measures webpage.
Economic recovery plan
For the information on the economic recovery scheme put in place by the Spanish government to address the impact of the COVID-19 pandemic on the Spanish economy, please visit the website of the Spanish Ministry of Economic Affairs and Digital Transformation (MINECO) and the dedicated page on the official governmental portal La Moncloa. Further information in English is available on KPMG's website.
The information on the EU's economic response to COVID-19 and the actions to minimise the fallout on the EU member states' economies of the COVID-19 outbreak is available on the websites of the European Commission and the European Council.
For the general overview of the key economic policy responses to the COVID-19 oubreak (fiscal, monetary and macroeconomic) taken by the Spanish government to limit the socio-economic impact of the COVID-19 pandemic, please consult the section dedicated to Spain in the IMF's Policy Tracker platform.
Support plan for businesses
For the information on the local business support scheme established by the Spanish government to help small and medium-sized companies to deal with the economic impacts of the COVID-19 epidemic on their activity, please consult the portal of the Spanish Ministry of Economic Affairs and Digital Transformation (MINECO) COVID-19: Business Support Measures (in Spanish).
For a general overview of international SME support policy responses to the COVID-19 outbreak refer to the OECD's SME Covid-19 Policy Responses document.
Support plan for exporters
To find out about the support plan for exporters put in place by the Spanish government, please consult the Spanish Ministry of Economic Affairs and Digital Transformation website. Support plan for Spanish exports is also available on the Spanish Chamber of Commerce website and on the Ministry of Industry, Trade and Tourism.

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Latest Update: November 2022