Spain saw more than 68 million tourists visit the country in 2015, and its gross domestic product (GDP) increased 0.8% in the fourth quarter of the year.
Overall, the Spanish economy grew 3.2% in 2015, according to Spain's Institution of National Statistics. The unemployment rate in the country fell by 2.8 percentage points in the fourth quarter, the agency said.
With the tourism industry contributing more than 11% to Spain's national economic output, the economic growth comes despite Spain being in a political limbo.
Acting Prime Minister Mariano Rajoy is reportedly battling corruption scandals against his Popular Party (PP) even as he struggles to form a government after his party failed to notch up a majority in last month's polls.
Tourism, along with domestic demand and fall in international oil prices, are said to be the main factors pushing Spain's economy.
According to Reuters, the increase in foreigners visiting Spain last year was likely linked to a spate of terror attacks in other popular destinations such as Egypt and Tunisia.
Spain is expected to see among the best GDP growths in 2016 as well, with the European Commission estimating that the country will grow 2.7%, higher than the 1.8% estimate for the euro area, comprising 19 nations.
In its November 2015 European Economic Forecast, the commission had said the labour market reforms in Spain that reduced labour costs could help the nation be the fastest growing economy in the euro area.
Spain is also said to be revamping its tourism sector as part of a €187-million ($204-million) campaign to promote historic attractions, pulling down old buildings and laying pedestrian streets, according to the Reuters report.