Spanish economy needs to diversify sources of growth, says leading economist

Spain should invest more in renewable energies, artificial intelligence and education, a leading Spanish economist said.

BARCELONA, Spain, June 28 (Xinhua) -- Since the end of the COVID pandemic, Spain's economy has been expanding thanks largely to the recovery of its tourism sector. However, the country should now focus on diversifying its sources of growth by, for example, investing more in renewable energies, artificial intelligence (AI) and education, a leading Spanish economist told Xinhua in an interview on Friday.

In 2022 and 2023, the economy grew a lot driven by a post-COVID tourism boom. But now this type of growth is reaching a plateau and "we see stagnation, which means (we must) find other sources of growth," said Sergi Basco, associate professor of economics at Barcelona University.

"Unlike countries such as Germany, Spain has a high number of sunny hours, so it would make sense to invest more in solar power and the production of renewable energy for export. There are industries and sectors other than tourism that could be promoted," he added.

Although Spain's economy grew by 0.8 percent in the first three months of this year, almost tripling the Eurozone average of 0.3 percent, Basco warns it grew "for the wrong reasons," including tourism and investments by the government, "which is still spending the European recovery funds."

GDP growth for 2025 and 2026 is projected to shrink to 1.8 percent because the tourism dividend and the special European funds are running out, Basco noted.

This, he said, is very low, but the decline could be reversed by shifting focus to such areas as renewable energy and AI and investing more in education.

Investing in education and making efforts to reverse recent trends that show falling grades in Spanish schools, particularly in mathematics, will ensure that young people will be better prepared to work in new industries, "meaning that when they enter the job market they will be more productive," Basco said.

He also said he expects companies -- both foreign and Spanish ones -- to play a key role in boosting the level of productivity through investing in new business projects throughout the country.