Publications

In January, the BCRP kept its policy rate at 4.25% for the fourth straight month. This neutral stance is consistent with an economy near its potential and inflation on target. We expect the policy rate to remain at this level in the coming months.

Consumer prices rose by 0.9% in Dec, leading its annual inflation to fall to 30.9% by end 2025. Lower than expected Dec figure and supportive early year tax adjustments create room for a similar 150bps rate cut in January; however, the persistent stickiness in inflation trend and expectations requires to remain cautious.

Employment is expected to increase by 2.3% in 2026, while the unemployment rate is projected to decline to 10% on an annual average basis. If these projections materialize, the Spanish economy would have generated more than 1.5 million jobs over the 2024–2026 period.

Regional convergence in per capita income in Spain had advanced for decades but stalled since the Global Financial Crisis. The halt in productivity convergence and its growing correlation with employment and participation explain the persistence of territorial inequalities.

The Spanish economy is growing more through employment than productivity. The efficient allocation of resources (capital and labor) to more productive sectors is one of the structural challenges. There's an urgent need to boost investment, human capital, and AI, and remove barriers for the most productive companies to grow.

The share of goods exports in Spain’s GDP has declined since the pandemic, while tourism and other exportable services have gained prominence. The challenge is to harness this potential without undermining industrial competitiveness, by anchoring it in productivity, investment, and human capital.

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%.