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Headline inflation slowed to 3.2% year-on-year, driven primarily by energy prices and, to a lesser extent, services. Meanwhile, core inflation moderated to 2.8%. However, BBVA Research estimates that headline inflation could rise to 3.4% or 3.5% in May.

Headline inflation in Spain accelerated to 3.4% YoY in March, driven by energy and, to a lesser extent, by services and industrial goods. In fact, core inflation rose unexpectedly to 2.9%. BBVA Research estimates that headline inflation could rise to 3.6% or 3.7% in April.

The quote “it is difficult to make predictions, especially about the future” is attributed to Niels Bohr. Today, it is even more so in an environment of high uncertainty. The increase in costs caused by the war between the U.S. and Israel against Iran will have negative effects on the Spanish economy.

The balance of 2025 showed economic resilience in the face of geopolitical tensions, supported by lower inflation and investment. The war in the Middle East is a supply shock, whose impact will depend on how long it lasts and how oil prices evolve.

The scenario for the Spanish economy points to the continuation of the pattern observed in recent quarters: The expansion will be sustained as long as the capacity to create employment increases and the productivity of capital continues to grow.

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.

This presentation analyzes forecasts and recent developments related to the global economy, as well as other issues such as geopolitics, the US dollar and the new global financial architecture, defense in Europe, and GenAI, employment, and productivity.