The Peter Zeihan Podcast Series - ¡Ostia! Spain's Economy Is Booming || Peter Zeihan

Episode Date: April 14, 2025

The Spaniards have been on an economic hot streak as of late. So, what have they been doing right, and will this streak continue?Join the Patreon here: https://www.patreon.com/PeterZeihanFull Newsletter: https://mailchi.mp/zeihan/ostia-spains-economy-is-booming

Hey, everyone, Peter Zion here coming to you from a chilly morning in Colorado. Today, we're going to talk about Spain a little bit. Spain is a country that has been in the news in a good way. That's a nice change for having relatively robust economic growth, a fairly good balance, getting this budget under control, and a series of good national policies that have been put in place over the last 15 years that are actually serving it well. Economist kind of named it the country of the year last year

for the country that seemed to be doing the best. I don't want to reign on the parade, but we need to put things in context. The two things that the economists pointed out that the Spanish had done right, I broadly agree with. Number one, they've done a series of macroeconomic forms that have made it much easier to do business in Spain than it is in France or Italy or the United Kingdom or Germany. And in doing so, it's really unleashed the population to do more. And then second, they have a relatively open-door immigration system. and so they've been able to flush out their demographic structure in a very useful way. The country, based on whose statistics you're using, is somewhere around 15% foreign-born,

with most of those people having moved in it in the last 15 years. That is pretty significant for a European nation state. These are real things. These do have legs, but I need to put that into context so you understand that this is not a long-term fix. Number one, the Spanish demography is based like everyone else's. on when they started to industrialize. When you move off the farm and into town, kids go from being free labor to an expense

and you have fewer of them. Well, the Spanish really got serious about industrializing in the 70s, and so they've got this population bald among people who were in their 40s, and then it drops off precipitously below that. Part of the reason that the Spanish opened their doors to immigration

was try to round out that lower section as much as they could. It was the right call. Also, there's the issue whether or not this is replicable, and it probably isn't, because Spain used to have a hemisphere spanning empire. And so there are Spanish speakers of Spanish descent living throughout the Western Hemisphere. And it's fairly easy for the Spanish mainland, Spanish government, Spain proper to import people from these former colonies with a minimum of cultural fuss.

This isn't like France where they're bringing in Arabs. It isn't like the United States where we're bringing in Hispanics. They are Hispanics who are bringing in other Hispanics, and the cultural lift for that is a lot less. Just keep in mind that if the Spanish want to continue to repair or just maintain their demographic structure, they're going to have to bring in just shy of a million people a year who are under the age of 30 from now on.

And you do that for 20, 30 years, and you change the culture quite a bit. In Spain, you don't change it as much as everyone else. So that's kind of piece one. piece two is the nature of that demographic bulge itself as a country ages as its demographics get older it's not all bad it used to be when you have a lot of people with it or zero to 25 all those young people there was a lot of consumption from the raising of the children and that generated a lot of inflation that's not spain's problem spain's bulge is now in the late 30s to early 50s so these are people who are for the

most part childless and all the money that they would have spent on their children are instead being spent on consumption. And so you're going through basically a 25-year consumption boom in Spain that's going to last at least another decade. And that is very real. And it feels great because you get industrial growth, you get production growth, and you get consumption growth. But it's a one-shot deal, if anything, happens to that lower age bracket that is now fueled almost entirely by immigration. We've seen things like this before. It's happened in China. It's happened in Korea. It's happened in Germany. And if you can't round out that bottom tier, it's a one-shot deal.

Now, it's a one-shot deal that lasts 25 to 30 years, and the Spanish are in the middle of it. They should enjoy it. But the trick for them will be preparing for what's next. Now, like the United States, that is aging much more slowly than the European countries, we are going to be able to look at everybody else who is so much more advanced on this and learn from their mistakes and their successes moving forward. And the Spanish are in a decent place to do that.

But at the end of the day, they're part of a currency union and a political union that is demographically spent. And they will need to find another path forward not just in terms of their economic model, but their economic grouping. Luckily, there is a potential answer on deck. The Mexicans from time to time have flirted with the idea of Spain joining NAFTA. And I got to say, it would be a pretty clean fit. The demographics line up, the industrial bases are complementary, and having a foothold in mainland. Europe would not be a bad idea for the NAFTA countries.