Spain Economic Outlook. March 2025

Summary

The recovery will continue in 2025 (2.8%) driven by greater competitiveness, lower oil prices, investment in renewable energy, euro depreciation, and lower inflation and interest rates. In 2026, growth will slow (1.8%) due to weaker expansion in Europe and increased uncertainty.

Key points

• Key points:
• Global growth will slow amid rising uncertainty and protectionism. While recent data indicate upward revisions for the U.S. and China, both will continue to decelerate due to tariff uncertainty. In the eurozone, the outlook is worsening, but defense spending could provide some support.
• An acceleration in job creation is confirmed, along with stronger household consumption and resilient service exports. In this context, quarterly GDP growth is expected to remain high, estimated at around 0.7% in the first quarter of 2025.
• The current recovery breaks with the pattern seen after previous crises. Spain's GDP is close to regaining its pre-pandemic growth trend, something that remains out of reach for the eurozone.
• A slowdown in activity is expected towards 2026. Concerns include uncertainty over U.S. trade policy, an unusually high household savings rate in Spain, and investment that has yet to respond in line with the pace of growth.
• Economic policy uncertainty is rising due to a lack of consensus at both the national and European levels. Implementing measures to ease concerns about the impact of changes in trade, fiscal, and monetary policy will be crucial.

Geographies

Topics

Tags