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Spain is not only the World Champion, but also Europe’s growth star. Its economy is expected to expand twice as fast as the eurozone this year. The boom is not being driven by artificial intelligence, but by immigration, tourism and broad economic diversification. “For investors, this presents opportunities, but also structural risks,” says Thorsten Fischer, Managing Director and Head of Portfolio Management at Moventum AM.

Spain has reached a remarkable economic milestone: with gross domestic product exceeding US$2 trillion, the country has overtaken South Korea for the first time and is currently one of the fastest-growing advanced economies. Unlike in many other developed economies, however, this upswing is not based on a dominant technology sector or an AI-driven boom.

Immigration is a key driver. “Around 80 per cent of the increase in employment since 2022 has been attributable to foreign workers,” Fischer explains. Extensive regularisation programmes and a growing population – from approximately 47 million to almost 50 million people – are increasing not only the supply of labour, but also domestic demand and tax revenues.

Tourism is also providing a strong boost. While the conflict in the Middle East is weakening growth elsewhere, Spain is benefiting from its increasing popularity as a travel destination. As a result, tourism now accounts for around 13 per cent of economic output. Although the conflict in the Middle East is pushing up oil and gas prices, the impact in Spain is being cushioned by the country’s comparatively high share of renewable energy, which is also helping to stabilise inflation.

By comparison, South Korea’s growth, for example, is much more dependent on global demand for AI semiconductors. “This makes it more cyclical and potentially more vulnerable to external shocks,” Fischer explains. Spain’s economic expansion, by contrast, rests on several pillars, including industrial exports, agriculture, services and immigration. This diversification gives its growth greater resilience in the short term.

However, the first signs of structural strain are emerging. According to Fischer, the situation in the housing market is particularly acute. In metropolitan areas such as Madrid and Catalonia, housing costs absorb up to 70 per cent of many households’ income. Public investment remains below 3 per cent of GDP, lagging behind the European average. “Moreover, the strength of the economy has yet to be reflected in the incomes of many Spaniards.”

In the long term, however, the crucial weakness remains productivity. Growth per capita is significantly lower than overall economic growth, while productivity per hour worked continues to lag behind that of Europe’s leading economies. Initial technology-sector initiatives, such as investments in semiconductor developers, may signal a change in strategy. “However, these measures alone will not be enough to address the structural shortcomings,” says Fischer.

Political uncertainty is also increasing. The anti-immigration Vox party is gaining influence at regional level, while funding from the European Recovery Fund is coming to an end. Final funding applications must be submitted by late summer 2026, creating additional pressure for action.

According to Fischer, the result is a nuanced picture for investors: “Spain demonstrates that solid growth is possible even without a dominant AI sector and is providing important momentum for the eurozone.” At the same time, this is less a conventional growth story than a transitional phase. The country’s long-term attractiveness as an investment location will depend largely on whether it succeeds in developing productivity, infrastructure and housing in step with demographic growth. South Korea could serve as a reference model for Spain’s next, more technology-driven stage of development.