Spain is poised to overtake the US and become the world's fastest-growing major advanced economy this year, expanding at more than three times the rate of the eurozone overall.

The Spanish economy grew at a faster-than-anticipated rate of 0.8% in the third quarter compared to the previous three-month period, maintaining the same pace of expansion, according to preliminary data from the National Statistics Institute released on Wednesday.

Analysts surveyed by Reuters had predicted a quarter-on-quarter GDP growth of 0.6% for Spain, which has significantly outperformed the eurozone as a whole.

Whereas on an annual basis, Spain's economic output in Q3 increased by 3.4%, surpassing the average estimate of 3.0% in the Reuters poll and showing a slight acceleration from a revised 3.2% growth in the previous quarter.

Beforehand, economists surveyed by Consensus Economics had anticipated that GDP data would reveal that Spain is on track for a 2.7% growth this year, driven by factors such as immigration, tourism, foreign investment, and public spending. 

The IMF, which categorises Spain alongside G7 nations in its analysis of large, advanced economies, has an even more optimistic outlook.

Last week, the IMF projected a 2.9% growth for Spain, slightly above its 2.8% forecast for the US. This positions Spain, the eurozone's fourth-largest economy, at the forefront of a notable divergence that has emerged as the region's most significant economic trend this year. 

While Germany and other wealthier northern countries, like the Netherlands, have faced challenges in achieving growth, traditionally weaker southern states, such as Spain and Greece, have shown strong performance. 

Opposition politicians in Spain and some economists point out a downside to the country's growth narrative, highlighting that GDP per capita is increasing at a slower rate than overall GDP, Financial Times reports.

This trend is partly attributed to the influx of 700,000 working-age immigrants into the workforce over the past three years, according to Funcas, a savings bank foundation. 

While this surge has contributed to an increase in the overall population from 47.4 million to nearly 49 million, many of these immigrants are employed in low-skilled, low-paid positions.

Whereas critics of the Socialist-led government argue that many Spanish families are grappling with the high cost of living and assert that insufficient measures have been taken to address the pressing shortages of affordable housing.

Spain’s headline growth is expected to slow to 2.1% next year, but its current strength serves as a boost for Prime Minister Pedro Sánchez, who is keen to take credit for this success and enhance the country’s international reputation.

“I can say that Spain is living an extraordinary moment. “Our country is experiencing great success,” the PM stated.

Although Spain's economy took longer to recover from the effects of Covid-19 compared to many of its counterparts, it is now 5.7% larger than it was in 2019, while the eurozone as a whole has grown by 4.2%.