Spain | Growth despite headwinds, but for how long?

Summary

Upward revisions in growth forecasts for the Spanish economy have multiplied recently. The feared slowdown that was expected has not occurred.

Key points

• Key points:
• Neither the increase in tariffs nor the appreciation of the euro against the dollar, nor the lack of investment in key sectors (such as housing and energy)—or even the increase in domestic uncertainty—have been enough to stop the momentum behind job creation.
• BBVA Research estimates that, given the behavior of Social Security affiliation and the other known indicators, GDP growth in the third quarter of 2025 will be around 0.7%, just below that observed in the second quarter.
• However, this does not mean that the negative effects of the above factors are absent: Exports of goods to the United States are falling, investment in machinery and equipment remains weak, and the lack of consensus to resolve some bottlenecks threatens to aggravate them.
• The lack of a perceptible slowdown in activity may be explained by the fall in interest rates and several external factors such as the fall in oil prices, the shift in European household spending preferences that favors the tourism sector and the increase in immigration.
• The current balance between supportive and adverse forces is not assured. If the positive factors weaken and no policy consensus is reached to improve productivity, stimulate investment and advance fiscal consolidation, growth could lose momentum and fail to improve in quality.

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