Published on Thursday, October 22, 2026

Spain | Decomposition of the economic cycle until Q4 2026

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BBVA Research forecasts growth of 2.6% in 2026 and 2.1% in 2027. Extending the business-cycle decomposition through end-2026 points to a slowing expansion: demand and credit offset supply-side constraints, while weak productivity limits convergence with the EU8.

Key points

Key points:
BBVA Research expects Spain’s economy to grow by 2.6% in 2026 and 2.1% in 2027. Domestic demand, employment and services exports will support activity, although energy costs and financial conditions could slow the expansion.
This edition extends the EREMS model’s structural decomposition into the forecast horizon, combining observed data through Q2 2026 with projections for the second half. GDP per working-age person would return to its trend by year-end, with annual growth near 1%.
In Q2 2026, demand and credit added 1.3 pp to growth in GDP per working-age person relative to its historical average, versus -1.1 pp from supply. By year-end, their contributions would nearly offset (+0.4 and -0.4 pp). Residential capital would remain a drag; contributions from total factor productivity and price margins would recover, while corporate credit would play a larger role.
Unemployment stands at 10%, its lowest level since 2008, with vacancies high but stable and the wage share of GDP at 54.3%. Following the recent greater contribution of hours worked, projections suggest hourly productivity would again support growth by end-2026.
Private consumption, private investment and full-time-equivalent employment per working-age person are above their historical trends but would lose momentum in the second half. Spain has converged moderately in per capita income towards the EU8, yet hourly productivity remains around 74% of the EU8 level, alongside high public debt and relatively high unemployment.