Spain Economic Outlook. June 2025

Summary

GDP is projected to grow by around 2.5% in 2025 and 1.7% in 2026, maintaining a pace close to the medium-term trend despite a slowdown. This deceleration will be largely driven by shifts in U.S. trade policy and the heightened uncertainty they have triggered.

Key points

• Key points:
• Protectionism and uncertainty will weigh on economic activity. Growth in the U.S. is expected to slow more than previously anticipated, though not necessarily in China or the eurozone. In Europe, the impact of tariffs will be offset particularly by fiscal spending in defense.
• Among the factors that will support growth in Spain are the decline in oil and gas prices, a more expansionary economic policy stance in Europe, increased growth potential in the services sector, and the boost from higher defense spending.
• Economic activity is expected to gradually lose momentum. The rise in tariffs and growing uncertainty will impact trade flows and investment. Bottlenecks are becoming apparent, such as the sluggish recovery of private investment, high household savings, and a shortage of affordable housing.
• There is a need for broad consensus around measures aimed at boosting long-term growth. Productivity per employed person is rising below the historical average; it is necessary to increase labor market participation, reduce job insecurity, and improve the profitability of investment.
• Public finances remain vulnerable to less favorable scenarios. Accelerating the deployment of NGEU funds is essential.

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