Publications

Economic activity grew again in 4Q25 (0.8% q/q), driven by domestic demand and despite the drag from net external demand. GDP growth was supported by an increase in hours worked, as productivity per hour fell. Overall, GDP grew by 2.8% in 2025.

Economic activity relies more on domestic demand and services, and with greater external risks, leading to growing divergences between regions.

Housing demand in Spain will remain solid driven by employment, wages, and immigration. However, the shortage of new supply will limit sales and maintain strong upward pressure on prices. Furthermore, the profitability of the construction sector remains low compared to Europe.

GDP is estimated to have grown by 2.8% in 2025, and the expansion is expected to continue, with growth of 2.4% in both 2026 and 2027. The outlook remains favourable, although structural challenges persist in a more uncertain international environment than three months ago.

This Working Paper proposes a set of quantitative indicators of territorial equity to assess reforms to the regional financing system, comparing the current model with the Government’s recent proposal and several variations aimed at reducing arbitrariness.

Regional GDP is estimated to have grown by 3.1% in 2025, with further growth of 2.4% projected for 2026 and 1.9% for 2027, above the region’s historical average.

Spain is experiencing a dynamic period of strong job creation that invites optimism, but it also raises a question for debate: where does the labor force needed to sustain this growth come from without overheating the labor market?