Spain | The economy is facing the challenge of sustaining growth in an uncertain world

Summary

Spain is entering 2026 with one of the strongest growth trajectories in Europe. After expanding by 3.5% in 2024 and 2.9% in 2025, BBVA Research, in its latest forecasts released last December, projects growth of 2.4%.

Key points

• Key points:
• This strength is attributed to a combination of structural factors, including robust domestic demand, the implementation of European Next Generation EU (NGEU) funds, public and private investment in housing, defense, and infrastructure, as well as an increase in immigration, which expands the labor supply and moderates wage pressures.
• Despite the dynamism shown, the Spanish economy still faces challenges that limit its potential growth. Productivity (GDP per employed person) has barely improved since 2019, the housing supply remains insufficient to meet existing demand, and public finances continue to be strained, with debt approaching 100% of GDP and a structural deficit requiring an annual adjustment of 0.4 percentage points until 2030 to comply with European rules.
• The advancement of digitalization and AI could become the growth engine of the next decade, provided it is accompanied by investment in human capital and productivity.
• 2026 will be a year of macroeconomic normalization, with more moderate growth, inflation under control, and historically low interest rates. At the same time, it will also be a year of global financial and geopolitical risks.
• For Spain, the challenge will be to transform the recent growth—supported by temporary factors such as the recovery of tourism and European NGEU funds—into a new cycle based on innovation, investment, productivity, and fiscal sustainability.

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