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What’s behind Spain’s GDP surge?

What’s behind Spain’s GDP surge?

Update: 2025-01-30

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From the BBC World Service: The European Central Bank is expected to cut interest rates today to give a boost to the eurozone’s sluggish economy. As major economies like France, Germany and the United Kingdom struggle, Spain’s growth outstripped the eurozone last year. What’s the key to its success? Also, the artificial intelligence showdown continues as China’s tech giant Alibaba unveils its own AI chatbot. We’ll discuss.

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Transcript

00:00:00

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00:00:03

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00:00:11

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00:00:21

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00:00:28

From crisis to comeback, Spain turns its economy around.

00:00:34

Life in the UK, this is the Marketplace Morning Report from the BBC World Service.

00:00:39

I'm Leana Bern, good morning.

00:00:41

The European Central Bank is expected to cut interest rates today to give a boost to the Eurozone's sluggish economy, but one country is already surging ahead.

00:00:50

Spain, new data shows Spain's economy grew 3.2% last year outpacing France, Germany, Italy and the UK.

00:00:58

That's a big turnaround for a country hit hard by COVID.

00:01:01

In fact, the economist just rang to Spain the strongest performing economy in the world.

00:01:06

So what's driving this comeback?

00:01:08

The BBC's Guy Hegeko has more.

00:01:10

In 2024, Spain received a record 94 million visitors, helping drive GDP growth of over 3%.

00:01:20

That's four times the Eurozone average.

00:01:23

I'm in the historic city of Sigavia, which is just north of Madrid.

00:01:29

And I'm looking up at the city's vast, famous Roman aqueduct.

00:01:34

And this is a place which has become a very popular tourist destination, even though it's not associated with the beaches and the coastal resorts,

00:01:45

which have made Spain so popular over the years.

00:01:49

Ilina Miron is a tour guide in Sigavia.

00:01:52

There were some moments in which when we were around the COVID, I thought that maybe the tourism will be never, ever like it used to be before.

00:02:02

Things became little by little much better.

00:02:06

Now things are very good.

00:02:08

And I thought this year is going to be also a good year, like it was maybe 2023 or 2024.

00:02:15

There are other reasons for Spain to be cheerful, too.

00:02:19

After a cost of living crisis, inflation is now under control.

00:02:23

And although unemployment is higher than in many neighboring countries, it's currently at a 17-year low.

00:02:30

The socialist-led government says labor reform has helped create quality jobs and that targeted subsidies offset the cost of living crisis.

00:02:39

Carlos Cuedopol is the economy minister.

00:02:41

Spain is proving to be more resilient to successive shocks, including the inflation shock that came with the war in Ukraine.

00:02:49

We are getting out of the COVID without scars, and we are getting out of that by modernizing our economy and therefore lifting our potential GDP growth up.

00:02:59

Along with Italy, Spain is the biggest recipient of EU pandemic recovery funds, and it's using them to create a greener economy.

00:03:10

I'm in a car production factory in Martalil, just outside Barcelona, and this factory belongs to the Spanish car company Seat, and it's one of the reasons why Spain is the second biggest car producer in Europe.

00:03:25

Wayne Griffiths, CEO of the company, believes there's room for further growth.

00:03:31

So it is one of the key industries in the country and also looking towards the future as well, particularly with electrification.

00:03:39

I think that's an opportunity not only of maintaining that level of industry, but with the game changer of renewable energy that this country has to make Spain even bigger in terms of car industry in the future.

00:03:50

Spain's growth is expected to remain robust this year, although the cleanup following recent tragic floods in Valencia is expected to lower GDP slightly.

00:04:01

There are also some clouds on the horizon.

00:04:04

Public debt remains high, and a housing crisis is preventing many Spaniards from finding an affordable home.

00:04:11

But in the meantime, the country is enjoying its moment in the sun.

00:04:15

In Spain, I'm the BBC's Guy Hedgeco for Marketplace.

00:04:18

All right, let's do the numbers.

00:04:20

European stocks are on a roll.

00:04:22

Stock 600 index hit another record high today.

00:04:25

That's ahead of that ECB's decision on interest rates.

00:04:28

It's also thanks to gains and tech and industrial shares.

00:04:31

And over in telecoms, Nokia had a strong quarter with demands for its mobile network gear, surging in North America and India.

00:04:38

Companies sales jumped 10% beating forecasts.

00:04:42

Also, the AI showdown continues this week.

00:04:45

China's Alibaba has released a new version of its model Quinn 2.5.

00:04:50

What appears to be a direct rival to DeepSeek, the BBC's Suranjana Tawari, has more.

00:04:55

Analysts are saying that that point to the pressure that Chinese AI startup DeepSeek's meteoric rise has really placed just on overseas rivals,

00:05:05

but also domestic competition.

00:05:08

So, Alibaba's version is called Quinn 2.5.

00:05:12

And in an announcement, it said that it performs not just DeepSeek's V3, but also ChatGPT40 and also Meta's Lama.

00:05:22

Suranjana Tawari reporting.

00:05:24

Now, my colleague Dave Brancaccio is facing something no homeowner ever wants to go through, starting over after losing his home to a wildfire.

00:05:32

David and his wife, Mary, were among the thousands who saw the biggest investments of their lives turned to ash.

00:05:38

Her house in El Tadina was a total loss.

00:05:40

Now, he's navigating the long, difficult process of rebuilding.

00:05:44

Botanist Jeff Chimnek, who lost his own home in California five years ago, says the toughest part isn't just hiring a contractor.

00:05:52

It's finding the right one.

00:05:53

Sandley, several of our friends, sort of fell for the smoke and mirrors of contractors from out of town that promised new building techniques, cheaper prices.

00:06:05

And price is certainly a consideration, but it should not be your primary driver.

00:06:11

Did they end up with a house in the end?

00:06:13

A deficient house, or did they really get scammed and didn't end up with a house?

00:06:16

Well, one of them, the contractor that he engaged is in prison.

00:06:21

His rebuild was considered quick, but that was still two years from fire to certificate of occupancy.

00:06:28

Here more of David's reporting on later shows and at markaplace.org.

00:06:32

And that's it from the Marka Place Morning report from the BBC World Service.

00:06:36

My producer today was Rebecca Smiley.

00:06:38

I'm Leana Burn, have a great day, and thanks so much for listening.

00:06:41

[MUSIC PLAYING]

00:06:44

(upbeat music)

00:06:46

What’s behind Spain’s GDP surge?

What’s behind Spain’s GDP surge?

Marketplace / David Brancaccio and Leanna Byrne

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