Macroeconomic Analysis

The BBVA Research Manufacturing Indicator grew 5.5% in June, driven by the automotive sector. A gradual improvement is expected, especially in sectors linked to AI value chains in the U.S.

Housing demand will remain strong despite the decline in home sales in 2026 (-7.3%), but housing supply will remain insufficient, continuing to put upward pressure on prices. Grid congestion and growing competition for electricity access are already delaying new residential and economic developments.

Following its July pause, the ECB has adopted a more hawkish tone due to renewed geopolitical tensions and the surge in oil prices. The September rate decision remains open, depending on incoming data and geopolitical developments. If the Strait remains closed, it will be very difficult for the ECB to avoid another hike.

On July 23, the USTR imposed new Section 301 tariffs on imports from 60 economies. Mexico faces an additional 10% tariff for failing to effectively enforce its ban on goods produced with forced labor, constituting a USMCA violation.

The CBRT again kept the policy rate and the interest corridor unchanged at 37% and 35.5%-40%, broadly in line with market expectations. This marks the fifth consecutive month in which funding has continued through the overnight lending rate (40%).

Despite the drag from the conflict, we expect GDP growth to reach around 2.5% in the first half of 2026. Under our baseline scenario of gradually normalizing energy prices and a prudent policy mix, we maintain our 2026 GDP growth forecast at 3.0%.

Inflation in Spain moderated in June due to lower oil prices and government measures. However, over the medium term, higher business costs and the cyclical economic situation suggest that inflation will remain higher than that of the eurozone.