Spain overtakes Mexico and South Korea in GDP to return to global top 12

Spain returns to the GDP top 12 with the fine print still pending

Spain is the world’s twelfth-largest economy. The IMF says so, and headlines repeat it: within a year the country would have overtaken Mexico, Australia and South Korea in gross domestic product, and it is forecast to hold that place for several years. The fine print appears immediately. That GDP is measured in current dollars and against a population that keeps growing. The picture is good. The question is whose.

What the IMF says and which countries Spain overtakes in GDP

The organisation places Spain twelfth in the global economy, with Mexico, Australia and South Korea behind it, and argues the position can hold for several years. The three drivers cited are demographic expansion, job creation and tourism. This is no minor overtaking: South Korea is a top-tier technological power and its advantage looked structural.

In 2021, the GDP per capita gap in South Korea’s favour was 7,000 dollars. Four years later, the sorpasso is taken for granted and South Korea’s crisis does the rest. Gross GDP rewards size. It does not measure well-being.

GDP per capita rises from 36,000 to 42,000 euros, but the figure doesn’t add up for everyone

The projections accompanying the news put per capita income on a jump from 36,000 to 42,000 euros, enough to debunk the cliché that all the advance is added population. The problem is that international comparisons are shaky. Some analyses put Spanish GDP per capita at 92% of the European average. Others lower it to 80.21% and note that the real position in the per capita income table is around 35th or 36th, behind the eurozone average and with small countries ahead.

That is the crux. A country can climb the global ranking and stand still, or fall back, in the one that measures what comes into each household. Both figures are true at the same time and describe different things.

Immigration and tourism: the engines holding up the statistics

Foreign registrations with Social Security averaged 2,997,307 people in April 2025, of whom 2,062,794 came from outside the European Union and 934,513 from EU countries. The bulk contribute to the general scheme; the agricultural scheme accounts for 261,373 and the domestic workers scheme, 147,790. According to calculations in circulation, foreign workers account for 25% of GDP per capita growth, and the wage gap with domestic workers would have narrowed.

The other engine is tourism: 2.5 million jobs and close to 200 billion euros in revenue. Some argue, half-jokingly, that the sector moves more money in Spain than Apple and Google’s subsidiaries combined. The flip side of the same phenomenon is pressure on housing, public services and infrastructure, with wages that don’t keep pace.

The 2.6% Brussels confirms and the debt that doesn’t make the headline

Brussels raised its growth forecast for the Spanish economy in 2025 by three tenths, to 2.6%. The same package contains two figures that rarely share a headline: Spain is the fifth most indebted country in the European Union and its deficit remains above the EU average. The debate about raising military spending to 5% of GDP, as NATO demands, clashes head-on with that arithmetic.

How much of GDP comes from public spending and rents

Part of the analysis argues that more than half of GDP depends, directly or indirectly, on the public sector: public works, government contracts, pensions and civil servants’ salaries. Disposable income grows less than inflation and much of the increase is explained by pensions and public employment. The country doesn’t stop, say those who live off those contracts, while admitting that taking money from the left pocket to put it in the right is not creating wealth.

On the statistical side there is a detail almost nobody mentions: owner-occupied housing imputes a fictitious rent that also inflates GDP, alongside real rents that have gone to Monaco prices. And then there is productivity, which doesn’t keep up: output per hour worked lags behind, the classic warning that growth rests on square metres, tourists and people more than on technology.

With the population growing, GDP will keep adding and the global ranking will keep generating headlines. If migration flows slow or tourism hits its own ceiling — housing, water, saturation —, the position is hard to sustain. Nobody knows when that point arrives. Nor did anyone four years ago bet on overtaking South Korea.