Spain | Faced with Trump's tariffs: uneven growth in an uncertain environment

Summary

Spain has led EU growth since the start of the war in Ukraine. However, weak growth in Europe, persistent geopolitical tensions, and erratic U.S. trade policy overshadow the outlook.

Key points

• Key points:
• This new protectionist episode also comes at a time when the Spanish economy is showing signs of a slowdown in its GDP (contrasting with the acceleration in Social Security affiliation since the middle of last year) and reveals some asymmetries between its different components.
• GDP growth is as relevant as its composition. Investment and consumption (both private and public) grew below expectations. Domestic demand contributed 0.4 percentage points to quarterly growth, half of the anticipated amount.
• Only service exports, especially non-tourist exports, and external demand (with a contribution of 2 tenths of a percentage point) have shown an upward surprise.
• In the last two years, Spain has created almost two million jobs, and the working-age population has grown by 2.5%​. However, many of these new occupations are in sectors with below-average productivity, which has limited the advance of the GDP per employed person.
• The more Spain can do to consolidate its image as an open, reliable, and attractive country for private investment, with a transparent and predictable regulatory framework, the greater the benefits for its economic growth, its greater productivity, and its capacity to accelerate its convergence to the most prosperous societies.

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