2024 is shaping up to be a record year for tourism. Between January and May, the number of tourist arrivals in Spain reached 33.2 million, far outstripping the level recorded during the same period in 2023 (by 13.6%). Tourist spending (+21%[1]), which significantly boosted services exports in Q1 (+10.8% q/q), is likely to have continued to do so in Q2. Nevertheless, despite its undeniable effects on Spanish growth, mass tourism is becoming a source of tension in the country due to its impact on access to housing and resources. This has led Barcelona City Council to introduce a plan to stop renewing tourist apartment licences, which will lead to their phasing out by 2029.
The PMI Services survey shows an acceleration in activity throughout Q2 (56.8 in June, compared with 56.1 in March). The sub-component on the future business expectations remained high in June (66.9 against a historical average of 66.6), reinforcing the prospects of a very strong summer season. The index for new export orders rose (54.6; +0.7 points), and companies indicated that they are increasing their workforce to meet future demand (55.4; +0.3 points). Job creation in tourism services, particularly in the hotel sector, also continued to rise in Q2 (+0.6% q/q)[2], and the number of people registered with the social security system reached a new record in June (21.3 million).
This momentum in employment, combined with the gradual slowdown in inflation (3.6% y/y in June[3]), is bolstering household confidence. The latter returned to its highest level for a year and a half in June, thanks to a brighter outlook for the financial situation over the next twelve months and intentions to make major purchases. In fact, new vehicle sales rose by 5.1%[4] over the last three months compared with the previous three months, suggesting that private consumption will make a greater contribution to growth in Q2.
We expect Spanish GDP to maintain its strong momentum, growing by 0.7% q/q in Q2. Over the year as a whole, the country will therefore continue to offer one of the best prospects in the euro zone, with activity expected to expand by 2.6%.
Article completed on 11/07/2024
