Spain Economic Outlook. October 2026

The Spanish economy will maintain solid growth of 2.6% in 2026 and 2.1% in 2027, supported by employment, consumption and services. Higher energy costs, inflation and interest rates will weigh on activity, while structural challenges to growth persist.

Key points

• Key points:
• The global economy remains resilient, although uncertainty remains high. Geopolitical tensions are keeping energy prices and inflation elevated, while AI, defence spending and solid private-sector balance sheets continue to support activity.
• Employment, consumption and services exports will continue to support activity. Immigration is supporting job creation, favourable household fundamentals are underpinning consumption, and non-tourism services continue to show strong momentum.
• The deterioration in the external environment will moderate growth and keep inflation elevated. Higher energy and other input costs, together with higher interest rates, will reduce purchasing power, squeeze corporate margins and weigh particularly on investment.
• Structural challenges persist, but there are also opportunities to boost growth. Electricity grid congestion, generational replacement, weak productivity and fiscal consolidation pose challenges, while AI and higher defence spending could support productivity and investment.

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