Regional Analysis Spain

The Spanish economy will maintain growth of above 2% in 2026–2027, supported by consumption, services and construction, although the deterioration in the international environment is widening regional differences.

The Spanish economy is expected to maintain solid growth above 2% in 2026–2027, supported by employment, private consumption, services exports, and the housing sector. However, a weaker external environment, inflation, higher interest rates, and structural challenges will constrain part of its growth potential.

Tourism spending grew by 4.7% year-on-year in the first four months of 2026, showing signs of deceleration. This moderation reflects weaker momentum in domestic tourism amid inflationary pressures, in contrast with the notable strength and resilience of demand from international visitors.

Tourism maintained solid growth in the first four months of 2026, although with some moderation compared to the end of 2025. Total tourist spending grew by 4.7% year-on-year, driven especially by foreign tourism and the dynamism of destinations in the north and interior of the peninsula.

The increase in military spending in Spain to 2% of GDP will boost the economy and technological sectors through direct and indirect effects. However, the impact will be unequal due to the high dependence on foreign inputs and the strong territorial concentration of the industry.

The Valencian Community maintains high growth but faces a slowdown due to less momentum in services (both tourism and other sectors) and the gradual exhaustion of support measures following the DANA.

The economy of Extremadura maintains solid growth backed by job creation in public services, domestic consumption, and tourist arrivals. The agrifood sector faces challenges due to drops in exports of processed goods, geopolitical pressures, and productivity stagnation.