Activity in Spain’s agrifood sector is increasing at a faster rate than across the economy as a whole and the outlook for the 2024-2025 campaign is encouraging. Exports are holding up well in the adverse environment of recent years and the food price rally has begun to slow, although the cumulative increase since 2019 remains significant.

The olive oil industry is a deeply-rooted, traditional sector in Spain, is one of the most important in the country’s agricultural sector and plays a fundamental role from an economic, environmental, cultural and gastronomic point of view. In addition to being a source of income and employment in many rural areas, it also contributes towards territorial and social cohesion and the fight against depopulation, soil erosion and climate change.

Construction costs in Spain have increased considerably since January 2021, a rise that was prompted by the strong recovery in global demand as the economy reopened after the pandemic but was further aggravated by the outbreak of war in Ukraine. In recent months, however, the price of industrial metals on international markets has fallen sharply and the futures markets point to prices stabilising to some extent. Given this situation, the cost of construction materials in Spain is expected to moderate in 2023.

The Spanish economy has a diverse, export-oriented and highly productive manufacturing sector. However, the business fabric is still highly fragmented compared to German industry, a European benchmark. Increasing company size and the productivity of companies, through investment in R&D and adopting new digital technologies, and moving towards Industry 4.0 are key in the increasing competitiveness of a fundamental sector for the economy and for the Spanish foreign sector. The sector must also evolve towards a more sustainable industrial model: only companies that successfully undertake the energy transition will be able to compete in a new environment in which sustainability will be a prerequisite for continuing to operate in the market.

Rising production costs as a result of the war in Ukraine are affecting all the links in the food chain: production, processing, distribution and transport, although the primary sector has been particularly hard hit, also adversely affected by unfavourable weather conditions in the form of drought. Rising costs are being passed on to the food prices paid by end consumers, pushing up spending on food, particularly among lower-income households. The most positive note comes from the external sector: agrifood exports have continued to grow strongly in 2022 and competitiveness indicators do not seem to have worsened in spite of the price hikes.

Investment in the commercial real estate market fell sharply in 2023 as a result of the rise in interest rates. However, as 2024 progresses we can expect to see a revival in transactions, thanks to the anticipated fall in interest rates and an improvement in the fundamentals that determine the behaviour of the different segments. On the one hand, greater buoyancy in consumption will support the retail segment and the continued penetration of e-commerce will continue to require investments in the logistics segment. On the other hand, housing will consolidate its position as the segment attracting the most investment, and the hotel sector will continue to improve thanks to the strength of tourism in Spain. Finally, offices will continue to adapt to the new demands in terms of sustainability and the new forms of work that emerged after the pandemic.

It is inevitable that the property development and construction sectors, which are very sensitive to economic conditions and confidence levels, will contract significantly this year. We expect a notable decline in new building permits and a severe impact on employment in the construction industry. However, the nature of the shock and the state of the sector before the appearance of COVID-19, much more favourable than a decade ago, suggest it should be able to recover.

After a year in which demand for housing exceeded all expectations, in 2023 we predict that the number of sales will adjust significantly, mainly due to the impact of higher interest rates. House prices, which tend to respond rather slowly to any fall in demand, will slow markedly although we expect them to maintain a slightly positive growth rate in 2023 (albeit adjusting in real terms due to high inflation). The supply of housing, which is insufficient to meet structural demand due to the creation of new households, will remain very limited as a result of the economic slowdown, high construction costs and waning demand.

The pork industry has consolidated its position as the most important sector for Spanish livestock farming, accounting for over 40% of final livestock production. It comprises around 86,500 farms and 2,600 processors, with most of its production concentrated in just three regions: Catalonia, Aragon and Castile & Leon. Recently, the pork industry has managed to handle the fall in demand due to COVID-19 better than other meat sectors, a result of it being less dependent on the hospitality channel and also the increase in demand from China, whose domestic production has been severely affected by African swine fever (ASF). This situation has allowed Spain’s pork industry to consolidate its position as one of the major players in the EU and the world. The challenges that now need to be tackled by the sector include reducing its pollutant emissions and continuing to strictly apply the necessary biosecurity measures to stop ASF from entering Spain.

The economic policies implemented during the pandemic have cushioned the impact of the crisis on families’ financial situation. On the one hand, a further fall in household income has been avoided while, on the other, the ECB’s accommodative monetary policy has led to a reduction in debt interest payments. A detailed analysis of the effort required by households to pay off their mortgages, based on CaixaBank’s own internal data, duly reweighted to be representative of the Spanish population, shows that these measures have managed to reduce the mortgage burden during the pandemic for most households, although pockets of vulnerability still remain among low-income households.

In June 2016, the United Kingdom’s vote in favour of leaving the European Union (EU) opened up a new scenario for the British economy that could have important repercussions for the Spanish economy and particularly for the tourism industry, which receives around 16 million British tourists a year1. In this article we examine the impact of Brexit on the number of British tourists visiting Spain and its potential impact in the future under different EU exit scenarios.

The full recovery of international tourism spending in Spain hides major changes in the structure of demand by region of origin. Using data on payments made with foreign cards on CaixaBank POS terminals, duly aggregated and anonymised, we see that Western Europe remains the main issuer of tourists, and that North America and Latin America significantly increased their share of foreign spending. In contrast, the recovery of tourism from the Middle East and Asia and Oceania has been more disparate, affected by geopolitical and economic factors. Overall, a stable but robust growth outlook for 2024-2025 indicates that international tourism in Spain will remain in good shape.

The Recovery, Transformation and Resilience Plan (PRTR) for the Spanish economy could be an important catalyst for the real estate sector. With the help of European funds, the government plans to recondition half a million homes between 2021 and 2023, with the aim of improving their energy efficiency and thereby helping to achieve the agreed decarbonisation targets. The General State Budget (PGE) also proposes a notable increase in the funds allocated to increase the amount of rented social housing, a policy that is crucial as rents have become even less affordable for the most vulnerable members of the population.

The outbreak of war in Ukraine has overshadowed the positive outlook we were forecasting for the Spanish economy in 2022. While, at the end of last year, some factors had already appeared on the scene that hindered the economic recovery, the armed conflict in Ukraine has become the main focus of attention and the major conditioning factor for short-term economic developments.

In 2021, a milestone was reached that was hard to imagine a year ago: the mass vaccination of a large part of the population in advanced countries. Although new waves of infection are occurring, in those countries where population vaccination levels are higher it is likely that activity and travel restrictions as severe as those that have set the pace of economic development since the outbreak of the pandemic will not have to be reimposed.

Due to the pandemic, the current situation of the Spanish economy is very complex. The case of retail is no exception, although it is proving to be remarkably resilient in the face of all the restrictions on opening hours and capacity adopted in order to curb the pandemic. As revealed by the sector’s demand and employment indicators, retail trade is now close to, but below, its pre-COVID level. Despite this, an analysis of CaixaBank’s internal data shows very different figures for large and small companies, as well as for the different branches of activity, confirming that the sector has yet to recover completely.

In 2024, tourism GDP experienced another year of significant growth, with an estimated increase of 6% in real terms, roughly doubling that of the economy as a whole. This performance was driven by a sharp rise in the number of foreign tourists and their average spending, thanks to a recovery of British and long-haul tourism. On the other hand, Spanish tourists are now travelling abroad again, resuming pre-pandemic levels. In this favourable context, the hotel sector continues to enjoy very strong demand, which has allowed it to continue to raise its occupancy levels and its profitability to new highs. Looking ahead in 2025, Spain’s tourism sector will grow at a slightly more moderate rate, although it still has significant support factors to continue expanding and we expect it to remain one of the main growth drivers of the economy as a whole.