0:02 If I asked you to picture the economic
0:04 engine of Europe, where does your mind
0:07 go? You probably think of the industrial
0:08 factories of Germany or maybe the
0:11 financial hubs of London or Paris. If I
0:13 asked you to picture the economy of
0:15 Spain, you might picture something very
0:18 different. You might picture tourism.
0:19 You might picture a waiter serving
0:23 sangria to a British retiree. Or if you
0:25 follow economic news, you might picture
0:28 high unemployment and slow, painful
0:31 bureaucracy. For the last 15 years,
0:33 Spain has been the poster child for
0:36 European fragility. But while no one was
0:40 looking, something changed. The script
0:43 flipped. In 2024, Spain was the fastest
0:46 growing major advanced economy in the
0:49 world. That's right. That is a true
0:51 fact. While Germany, the traditional
0:53 powerhouse of Europe, was actually
0:56 shrinking, posting negative growth, and
0:57 France was struggling to keep its head
1:01 above water, Spain's economy expanded by
1:04 3%. That was, by the way, five times the
1:06 average growth rate of the Euro zone,
1:08 which is also a little bit sad, but it's
1:10 good for Spain. To put that in
1:12 perspective, in the last year, Spain
1:14 created more jobs than France and
1:17 Germany combined. So, how did this
1:19 happen? How did the country historically
1:21 mocked as one of the pigs of Europe,
1:23 which is Portugal, Italy, Greece, and
1:26 Spain, suddenly become the continent's
1:28 star performer? Well, but to understand
1:30 this, what some are calling the Iberian
1:33 miracle, we have to take a look at some
1:34 of the massive pillars as to what's
1:36 happening in Spain and why to some
1:39 people this is not a miracle at all. So
1:41 now, you cannot run a modern economy
1:43 without cheap power. And this is where
1:45 Spain has pulled off a master stroke. So
1:49 when Russia invaded Ukraine in 2022, the
1:51 European economic model shattered,
1:53 Germany, which relied on cheap Russian
1:55 gas to power its factories, saw its
1:59 energy costs explode. Its heavy industry
2:02 became uncompetitive overnight. But
2:04 Spain, well, Spain is an energy island
2:07 in a sense. It has very few pipeline
2:09 connections to the rest of Europe, which
2:10 used to be a weakness, but suddenly
2:12 became a strength. Because they weren't
2:14 as dependent on Russian gas, and because
2:17 they have vast empty geography, Spain
2:20 went allin on renewables earlier and
2:22 harder than almost anyone else in the
2:25 world. Today, Spain generates over 50%
2:27 of its electricity from renewable
2:30 resources. In fact, solar and wind have
2:33 become so dominant that on certain sunny
2:36 days and certain windy days in 2024, the
2:39 price of electricity in the wholesale
2:42 market actually dropped to zero and
2:44 sometimes went negative, by the way. So,
2:46 while German factories were shutting
2:48 down because they couldn't afford
2:50 electric bills, Spanish businesses were
2:52 enjoying some of the lowest energy
2:54 prices in the world. And this is what
2:56 some economists call the Iberian
2:58 exception. It kind of acted like a
3:01 massive tax cut for the entire country,
3:03 lowering inflation and boosting
3:05 production while the rest of Europe was
3:07 suffocating. So we got energy prices.
3:10 But next we have the export
3:12 transformation. So there is a lazy
3:15 stereotype that Spain is just a vacation
3:17 colony for Northern Europe. I mean
3:18 everyone likes to go to Spain, right?
3:20 It's beautiful, it's sunny, they have
3:22 the islands, it's amazing. And sure,
3:24 tourism is huge because of this. We are
3:26 talking about a country that welcomed 85
3:28 million tourists last year. Nearly
3:31 double the population of the country.
3:33 But if you look at the data, the real
3:35 story isn't tourism. It's what experts
3:38 call high value services. So we are
3:40 seeing a boom in Spanish exports of
3:42 consulting, engineering, financial
3:46 services, and telecom. In the last 3
3:48 years, Spain's service exports excluding
3:52 tourism have grown by nearly 30%.
3:53 Spanish construction giants are building
3:56 infrastructure in the US and as I know
3:58 in Canada as well. Spanish banking
4:00 dominates large parts of Latin America
4:03 too. And for decades, Spain ran a trade
4:05 deficit, meaning it bought more from the
4:07 world than it sold. That is the sign of
4:10 a weak dependent economy. But recently,
4:12 Spain has been running a massive current
4:16 account surplus of over €50 billion,
4:18 meaning they are actually selling things
4:21 of high value to the rest of the world
4:24 compared to how they always have. Now, a
4:26 next pillar of their Iberian miracle is
4:29 a labor market fix, we'll call it. So,
4:32 for 40 years, Spain's Achilles heel was
4:34 its job market. It was a disaster. It
4:36 was famous for having a dual market. You
4:38 either had an untouchable permanent job
4:41 or you were stuck in a cycle of endless
4:44 temporary junk contracts that lasted 3 months.
4:45 months.
4:48 Looking at you, Canada. This meant young
4:50 people couldn't buy houses or plan for
4:52 the future, which killed domestic
4:55 spending. Now, in 2021, Spain passed a
4:57 controversial labor reform that
4:59 essentially banned most of those
5:02 temporary contracts. Critics said that
5:04 it would destroy jobs. The data says
5:07 that the opposite happened since the law
5:09 passed. The number of workers with
5:11 permanent contracts has skyrocketed by
5:13 millions. And so why does this matter
5:15 for the economy as a whole and the GDP?
5:18 Well, because of consumer confidence.
5:20 When you have a permanent job, a
5:22 permanent contract, you can get a
5:25 mortgage, you can buy a car, you can go
5:27 out for dinner on a Tuesday. As it turns
5:29 out, job security is good for an
5:31 economy. Who would have thought? Now,
5:33 domestic consumption, which is Spaniards
5:36 spending money in Spain, well, that has
5:38 also woken up because for the first time
5:40 in a generation, millions of workers
5:42 feel slightly more secure. There are
5:45 currently over 21 million people working
5:47 in Spain, which is the highest number in
5:49 the country's history. And now we're
5:51 going to talk about the last pillar of
5:53 the Iberian miracle, and that is the
5:56 controversial demographic surge. So,
5:58 finally, we have to talk about the sheer
5:59 number of people that have entered
6:01 Spain. See, while Italy, Germany, and
6:03 Eastern Europe are facing demographic
6:05 collapse with shrinking populations,
6:07 Spain's population is booming, which hit
6:10 a record 48 million people just
6:12 recently. So, it's not because of some
6:14 sort of baby boom. It's because of, as
6:17 we know, immigration. In the last 2
6:20 years alone, Spain added hundreds of
6:22 thousands of new workers to its labor
6:24 force, largely from Latin America. From
6:27 a purely economic standpoint, this has
6:28 been rocket fuel for the overall
6:30 economy. These immigrants, according to
6:32 the government, are filling labor
6:34 shortages and agriculture, construction,
6:37 and hospitality that are crippling a lot
6:38 of other countries. They are paying
6:40 social security taxes and keeping the
6:42 pension system alive. And so, these are
6:44 the four pillars. We will come back to
6:46 this shortly, but for the next part, I'd
6:49 like to talk about the specific parts of
6:51 Spain that are actually booming right
6:53 now. And and also to the question, is
6:55 this growth actually real? I mean, is
6:58 Spain actually building a European
7:00 superpower economy or is just this some
7:03 sort of post-pandemic sugar rush of an
7:05 economy? So, we have to take a look at
7:07 where the money is actually going. And
7:09 right now, the smart money, the billions
7:11 from Brussels, from Wall Street, from
7:13 Silicon Valley, they are betting that
7:16 Spain is about to become two things.
7:19 One, the battery of Europe, and two, the
7:23 cloud capital of the south. So for the
7:25 last century, Spain's geography was an
7:27 economic disadvantage. It was on the
7:29 periphery, far away from the industrial
7:30 heart of Germany and the markets of the
7:34 UK. It had no oil, no gas, and difficult
7:37 mountainous terrain. But in the 21st
7:40 century economy, that geography suddenly
7:43 became a gold mine. Spain has more solar
7:45 radiation than almost anywhere else in
7:48 Europe. It has vast empty spaces in the
7:50 interior, what locals call ispana
7:54 vasiada or empty Spain, perfect for
7:56 massive wind farms. The Spanish
7:57 government all of a sudden pivoted to
8:00 try to become a massive energy exporter.
8:02 During this time as well, they want to
8:04 replace Russia as the continent's gas
8:07 station, but with cleaner electricity
8:09 from renewables from the empty parts of
8:11 Spain. Now, the centerpiece of this plan
8:14 is something called H2 Med pipeline.
8:16 This is a multibillion euro project to
8:18 build a massive underwater pipeline
8:21 connecting Barcelona to Marseilles and
8:23 eventually into Germany. But it won't
8:27 carry gas. It will carry hydrogen. You
8:29 see, hydrogen is the holy grail of clean
8:32 energy. It's fuel made by splitting
8:35 water using renewable electricity. It's
8:37 incredibly energyintensive to make,
8:38 which means that you can only produce it
8:41 cheaply if you have dirt cheap solar and
8:45 wind power. Luckily, Spain has that and
8:47 Germany does not. The plan is for Spain
8:49 to produce millions of tons of this fuel
8:51 and pipe it north to run German heavy
8:54 industry. If it works, it fundamentally
8:56 changes the power dynamics of all of
8:58 Europe. Instead of Spain begging Germany
9:00 for bailouts, Germany relies on Spain
9:03 for power. Now, but this energy play is
9:06 also about luring in giant tech
9:08 companies. You see, we are living in the
9:11 age of AI. You see, AI runs on three
9:13 things. Chips, data centers, and the
9:15 hopes and dreams of large-scale
9:19 investors. Now, now two of those things
9:21 consume a large amount of electricity.
9:23 So, tech giants like Amazon, Microsoft,
9:25 and Google are currently scouring the
9:27 planet for places to build massive data
9:30 center regions where land is cheap and
9:33 power is cheap as well and renewable.
9:36 And guess where they landed? Let me tell
9:38 you, in 2024, Amazon Web Services
9:40 announced an investment of nearly€16
9:43 billion in the region of Aragon. Also,
9:45 Microsoft is quadrupling its investments
9:49 in Spain because Spain guaranteed them
9:51 green power at stable prices for the
9:53 next 20 years. And then there is the
9:55 party chip plan. By the way, the Spanish
9:58 government has thrown 12 billion of
10:00 public funds onto the table to attract
10:02 semiconductor factories. And this is a
10:04 little bit of a harder battle than the
10:05 other ones because competing with the US
10:08 and Taiwan is is tough for chips. So,
10:10 it's an uphill battle, but it signals an
10:12 ambition for wanting change in the
10:14 country. Spain's no longer going to be a
10:16 tourist country. It wants to be a
10:18 country that builds infrastructure for
10:20 its citizens. And so, what are some of
10:23 the experts saying on this giant change?
10:25 Well, the International Monetary Fund
10:26 and the Bank of Spain are projecting
10:28 that the country's unemployment rate
10:30 could drop below 11% in the next 2
10:33 years. Now, in the US or the UK, 11%
10:34 sounds like a catastrophe, like the
10:36 worst number ever, but you have to
10:38 understand the Spanish history. So,
10:40 Spain hasn't even had unemployment below
10:44 10% since the 2008 financial crisis. And
10:45 for a generation of Spaniards,
10:47 double-digit unemployment is just a fact
10:50 of life, kind of like gravity almost.
10:52 Breaking that psychological barrier
10:54 would be historic for the country. Now,
10:56 on top of that, Spain is currently the
10:58 biggest beneficiary of the European
11:00 Union's next generation EU funds. That's
11:03 160 billion euros of grants and loans
11:05 flowing into the Spanish economy to
11:07 digitize businesses and insulate homes.
11:10 Now, on paper, the future looks golden
11:13 for Spain. The GDP is up. The debt to
11:15 GDP ratio slowly coming down as the
11:17 economy grows. The factories of the
11:19 future are breaking ground in Aragon and
11:21 Valencia. And so, if you were an alien
11:23 looking at all of these charts, you
11:25 would say Spain is a booming success
11:28 story. But economies aren't just charts.
11:30 They are also people. And if you walk
11:33 the streets of Madrid or Maaga or the
11:35 Bolerica Islands, you won't hear people
11:37 celebrating the Iberian miracle. You
11:39 will hear frustration. You will hear
11:41 about rent prices that have doubled
11:44 recently. You will hear about crowded
11:46 hospitals and cultural tension because
11:48 this is the dark side of the boom. The
11:50 macro numbers look great, but as we have
11:53 seen, especially here in Canada, the
11:55 individual numbers may not be so good.
11:57 You see, right now there is a massive
11:59 disconnect in Spain. The country is
12:02 getting richer, but the people are not.
12:04 This brings us to the most uncomfortable
12:05 reality of the Spanish boom, and that is
12:08 the GDP illusion. Remember how we said
12:10 Spain's economy grew by roughly 3%.
12:12 Well, that sounds amazing for the
12:15 European Union. But Spain's population
12:18 also grew massively due to immigration.
12:20 When you divide that bigger economic pie
12:22 by a much larger number of people, the
12:25 slice per person doesn't really grow. In
12:27 fact, it barely grew at all in Spain. In
12:29 economic terms, GDP per capita has been
12:32 effectively stagnant. For the average
12:34 citizen, the boom feels less like a
12:35 miracle and more like a crowded room
12:38 where walls are sort of closing in. And
12:40 nowhere is this more felt than in the
12:42 Spanish housing market. So, Spain is
12:44 currently facing a housing crisis that
12:46 threatens to tear its social fabric
12:48 apart at this current second. In cities
12:50 like Madrid, Valencia, and the Bleric
12:52 Islands, rental prices have skyrocketed
12:54 by double digits in just the last 2
12:57 years alone. So, why? Well, it's because
12:59 the same success that boosted the GDP
13:01 has been cannibalizing the housing
13:02 market. So, first of all, you have
13:04 something like the digital nomad effect,
13:06 something that I have a a close heart
13:09 to. Wealthy remote workers from Northern
13:12 Europe and the US are flocking to Spain
13:14 for the lifestyle. They earn London or
13:16 New York salaries, but pay Spanish
13:18 rents. So for a local Spaniard earning
13:21 the an average salary of €1,300 to
13:24 €2,000 a month competing with a software
13:26 engineer from California for an
13:28 apartment, it's mathematically
13:30 impossible for them. Then you have the
13:31 Airbnb phenomenon, which I've been
13:34 paying attention to. So landlords have
13:35 realized that they can make three times
13:37 as much money renting to tourists for a
13:40 weekend than to a Spanish family for a
13:42 month or a year. Entire neighborhoods
13:45 and city centers are being hollowed out,
13:47 and they are becoming more like theme
13:50 parks for visitors and more devoid of
13:52 local life. In 2024, this came to a head
13:55 when tens of thousands of locals took to
13:57 the streets protesting against mass
13:59 tourism. We saw protesters spraying
14:01 tourists with water pistols while they
14:03 were eating dinner. And again, this is
14:05 not just for tourists. I mean, the
14:07 tension extends to the demographic boom
14:09 that we saw earlier that has been
14:10 praised by governments all around the
14:12 world. Yes, adding millions of
14:14 immigrants has saved the pension system
14:17 in Spain and filled labor shortages. But
14:19 social integration is also much harder
14:21 than economic integration. So, public
14:23 services, healthcare centers, schools,
14:25 and transport, they're all straining
14:27 under the sudden population spike.
14:29 Waiting lists for doctors are getting
14:30 longer, and classrooms are getting
14:32 fuller. You see, there's a growing
14:34 feeling of the middle class in Spain
14:36 that the benefits of this growth are
14:38 just going towards the elites. They are
14:40 getting the benefits of cheaper labor
14:42 for businesses, higher rents for
14:44 landlords. Meanwhile, the downsides of
14:47 this growth are Meanwhile, the downsides
14:48 are going to the middle class, which are
14:51 more crowded services, lower wages, and
14:53 cultural friction. And also keep in mind
14:55 that right now youth unemployment is
14:59 still around 27% in Spain which is
15:02 amongst the highest in the entire world.
15:03 And so this brings us back to our
15:06 original question. Will Spain become the
15:08 next superpower? And I think that
15:10 depends on what the definition of a
15:12 superpower is. If your definition of a
15:14 superpower is a country that has overall
15:17 economic growth, has growing influence
15:19 over its neighbors or on a a global
15:21 scale and is developing a lot more
15:24 industries internally, then then sure,
15:26 Spain is becoming the next superpower.
15:28 But if you view it as creating better
15:30 lives for the citizens within the
15:32 country, then Spain is surely not
15:35 becoming a superpower anytime soon. But
15:36 what do you think? Let me know in the
15:38 comments below. Make sure to check out
15:41 my documentaries playlist if you liked
15:42 this video because I have a lot of other
15:44 videos just like this on there. So,
15:46 please check out that playlist and I'll
15:49 see you guys in my next video in just a few
