Spain | Economy stuck between positive momentum in Spain and global uncertainty

Summary

Amid the current environment, uncertainty over the trend in global (mainly) and local economic policy is currently very high, which can have significant and hard to predict consequences on the decisions of households and businesses alike.

Key points

• Key points:
• The Spanish economy continues to grow at a brisk pace, having closed out 2024 with GDP growth of 3.2%, four times higher than that of the Eurozone. Data for the first quarter suggest that the increase in activity (0.7% q/q) would be similar to that observed at the end of the previous year (0.8%).
• All else constant, there are reasons to believe that the recovery can continue and that GDP will grow by 2.8% in 2025 and 1.8% in 2026.
• The hope is that the competitiveness gains achieved so far will persist. Firstly, thanks to the drop in the price of oil, which is a key concern among transportation companies and, therefore, for exports.
• Second, due to the impact that the investments made to increase the weight of renewable energies will continue to have: BBVA Research estimates that, in the absence of this effort, electricity prices would be 20% higher today.
• The scenario is highly dependent right now on the decisions made by the President of the United States. The direct impact on Spain of an increase in tariffs on European imports by that country would be relatively small.

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