Publications

Spain faces the challenge of consolidating its public accounts without compromising potential growth. Public investment acts as a key production factor for productivity, but its persistent decline following the financial crisis and current pressure from current expenditure pose risks to European convergence.

Spain grew by 2.8% in 2025, driven by employment and domestic demand. Growth has been more extensive than intensive, with productivity remaining stagnant. Immigration has boosted employment and GDP per capita. The challenge is to raise both employment and productivity by increasing investment and improving its efficiency.

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.

The observatory analyzes the behavior of GDP and productivity per full-time equivalent employee in Spain up to the second quarter of 2025. The Spanish economy completed its post-pandemic recovery in that quarter, with GDP per working-age person standing 0.3 percentage points above its trend.

Uncertainty over US trade policy and implementation of the judicial reform are two factors that are holding back investment and economic growth. Nevertheless, the problem of low economic growth is not new.

Spain needs to recalibrate its fiscal policy to ensure a greater emphasis on spending in production, infrastructure, education, and new technologies. This would help boost long-term growth and improve well-being.

In developing economies, greenhouse gas emissions from deforestation and from pushing forward the agricultural frontier may outweigh those from fossil energy combustion. So how can we reduce them?