Spain | It is growing faster than Europe, but its productivity remains a challenge

Summary

Spain is growing faster than the EU (around 3% in 2025) and has the lowest unemployment rate since 2008 (10.5%), but productivity growth is disappointing and still lags behind the EU. More investment (in physical, technological, and human capital) is needed for more productive, innovative, and sustainable growth.

Key points

• Key points:
• Forecasts by the International Monetary Fund (IMF) and BBVA Research indicate that the Spanish economy is set to close 2025 once again leading growth among the large economies of the eurozone, with GDP growth of close to 3% year-on-year, compared to 1.3% for the eurozone as a whole.
• The data we have learned from the third quarter of this year indicate that activity grew by 0.6% quarter-on-quarter (2.8% year-on-year), driven by consumption and investment, which offset the decline in exports.
• Another positive aspect is that Spain has managed to reduce its unemployment rate to 10.5%, levels not seen since 2008. However, behind these figures lies a structural weakness that threatens the sustainability of the expansive cycle: Productivity is barely growing and is still far from the European average.
• The difference between the low but positive growth in GDP per hour worked and the stagnation of productivity per person employed can skew the debate in public opinion as if one had to choose between one or the other. The reality is that both are important in the long run.
• Spain is leading economic growth in Europe and has demonstrated remarkable resilience in the face of COVID, the repercussions of the war in Ukraine, and geopolitical tensions. However, the country needs to achieve not only stronger but also higher-quality growth by capitalizing on the opportunities presented by the AI era.

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