Spain Economic Outlook. October 2025

Summary

The GDP growth forecast is revised upwards to 3.0% (+0.5 pp) in 2025 and 2.3% (+0.6 pp) in 2026. The improvement reflects resilience to rising tariffs, reduced tariff policy uncertainty, and a greater impact of NGEU funds.

Key points

• Key points:
• Global growth is expected to moderate to 3.0 % in 2025 and 3.1 % in 2026. Despite fiscal support, looser monetary conditions and the rise of AI, activity will be affected by increased protectionism, limits on immigration, or geopolitical tensions. Recent data suggest that its impact will be more gradual than anticipated.
• The revision of the historical GDP series, together with the latest indicators available, point to a more resilient economy than expected
• The recovery is expected to continue, supported by a positive, albeit waning, contribution from external demand. Exports of services will continue to grow above GDP, thanks to rising investment, improvements in competitiveness and increased immigration.
• Domestic demand will continue to be the main source of growth. Inflation and interest rates are falling, which will allow the recovery of purchasing power and access to financing on more attractive terms. The acceleration of NGEU funds and increased spending on defense will also boost spending.
• There are still bottlenecks that can slow progress. The lack of investment and/or labor in some key sectors stands out, as well as the stagnation in the automotive industry, the housing deficit, the low productivity growth per worker and the lack of consensus for solving some of these problems.

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