Is Spain growing because of immigration or because of productivity?

Spain's economic growth has become a central topic of discussion among economists and policymakers, particularly regarding whether this expansion is driven primarily by immigration or by increased productivity. International organizations such as the OECD and the European Commission have highlighted Spain as one of the fastest-growing economies within Europe and the OECD, projecting continued outperformance over countries like France, Germany, and Italy, as well as the broader Eurozone average, into 2026 and 2027. This raises a crucial question: Is Spain’s economic success due to an increase in its workforce—largely attributed to immigration—or does it reflect deeper structural transformations involving improved productivity?

To understand the dynamics behind economic growth, it is essential to distinguish between two types of growth mechanisms: extensive and intensive. Extensive growth occurs when more workers enter the labor market, increasing output simply because there are more people producing goods and services. Intensive growth, on the other hand, involves improving the efficiency of existing resources—essentially making each worker contribute more value per hour worked. While extensive growth can be effective in the short term, it often faces limitations, especially as population growth slows down and the quality of new entrants into the labor force becomes a concern. In contrast, intensive growth relies on higher productivity, which can be more sustainable but also requires investment in technology, education, and innovation.

In the case of Spain, data analysis reveals that both factors have played a role in recent economic performance. According to figures compiled using Eurostat data from 2022 to 2025, Spain has experienced significant population growth, which has contributed to an increase in the labor force. Additionally, the employment rate has risen even faster than the population growth, suggesting that many of these new residents have entered the workforce. However, the number of hours worked per employee has decreased slightly, indicating a shift toward part-time or flexible work arrangements rather than longer working hours. This suggests that while the overall number of workers has grown, the contribution per individual might be lower than previously assumed.

Despite the potential drag on productivity from less-skilled workers entering the job market, recent evidence indicates that this effect may not be as pronounced as once thought. The integration of immigrants into the Spanish economy appears to be contributing positively to GDP, with some estimates suggesting that nearly half of Spain’s recent economic growth can be attributed to immigration. This perspective aligns with the views of Prime Minister Pedro Sánchez, who has consistently emphasized the positive impact of immigration on Spain’s economy and demographics.

Sánchez has recently reinforced his pro-immigration stance, highlighting the economic necessity of migration for Spain’s future. He argues that without immigration, Spain would face a substantial decline in its GDP by 2050, estimating a loss of around 19%. This projection includes the closure of tens of thousands of businesses, including bars, agricultural enterprises, and schools. Sánchez attributes much of Spain’s recent economic growth to the influx of immigrants, emphasizing their role in maintaining the country’s welfare state and preventing depopulation in rural areas.

His government has implemented a comprehensive integration plan worth €500 million, aimed at helping immigrants find employment, access education, and integrate socially. This initiative includes the creation of a national agency focused on human mobility, vocational training programs, and support for finding jobs. Sánchez has defended this approach against criticism from opposition parties like the People’s Party (PP) and Vox, who have expressed concerns about the implications of large-scale immigration. He has also countered skepticism from other European leaders, such as Italian Prime Minister Giorgia Meloni, who advocate for stricter immigration policies.

The debate surrounding immigration in Spain extends beyond economic considerations. It touches on social cohesion, regional disparities, and political strategy. For instance, regions like Extremadura, which suffer from low population density and high levels of depopulation, rely heavily on immigrant labor to sustain local economies. Yet, despite this need, anti-immigrant sentiment persists, particularly in areas where right-wing parties have gained influence. Sánchez has criticized these attitudes, arguing that exclusionary policies do not protect anyone and instead create additional challenges for society.

As Spain continues to navigate its demographic and economic landscape, the role of immigration remains a pivotal factor. Whether the current growth trajectory will continue to rely on expanding the labor force or transition toward more sustainable productivity improvements remains uncertain. However, the ongoing dialogue between policy makers, economists, and citizens underscores the complexity of this issue and the importance of addressing both immediate economic needs and long-term structural changes.