The Spanish economy remains resilient, but it is ageing

The Spanish economy remains strong in the current expansion, despite the challenging international context and rising energy prices. This is reflected in the indicators published over the summer. In Q2 2026, GDP grew by 2.7% year-on-year, above the historical average of 1.8% recorded between 2000 and 2025. Growth would probably have been somewhat higher had it not been for the recent energy shock.

The composition of growth also invites optimism. Economic activity continues to be driven by private domestic demand and service exports, components that typically show strong inertia throughout the economic cycle and which still have room for further growth. Furthermore, all this continues to be accompanied by a broadly balanced macro-financial position that is showing no signs of deterioration, unlike in previous expansionary phases. Private debt remains relatively low, while public debt and the net external debtor position continue to improve. This helps to keep the risk premium at contained levels and well below those of economies such as France or Italy.

The available indicators for Q3 suggest that economic dynamism is holding up well. Business climate indices have improved, driven by the recovery of the services sector and tourism in particular, which is on track to close a record year. All the indicators suggest that 2026 will end with more than 100 million international tourist arrivals. Household consumption also continues to show considerable resilience. Despite the uptick in inflation, employment growth and the savings buffer accumulated in recent years continue to support household spending. The savings rate has decreased slightly but remains at relatively high levels.

The labour market continues to show positive figures. According to data from the Q2 LFS, employment continues to grow above 2%. However, behind this overall pattern, distinct dynamics can be observed. Employment growth remains strong among foreigners or those with dual nationality, whilst among Spaniards it has significantly slowed, dropping from 1.9% year-on-year in Q1 to 0.7% in Q2.

Taking a broad view, a structural dynamic becomes apparent. The capacity for employment growth among the Spanish population has been declining in recent years. The Spanish labour force, which consists of people who are either employed or seeking employment, has barely changed in size since 2019, but it has aged considerably. Specifically, the number of Spaniards in the labour force aged between 25 and 55 has fallen by more than 1.1 million people. This is also an age group with a very high labour participation rate. Currently, nearly 90% of Spaniards aged between 25 and 55 are part of the labour force, with an unemployment rate of 7.5%, close to the all-time low reached in 2007 when it fell to 6.2%.

Thus, most of the employment generated among the Spanish population during the current expansionary phase has been concentrated at the extremes of the age distribution. Since 2019, the number of employed individuals under the age of 25 has increased by around 300,000, while for those over 55, the rise exceeds one million. The other source of employment growth has been driven by foreign nationals or those with dual nationality, with an increase of over two million employed individuals during this period.

The strength of the Spanish economy allows for a degree of optimism in facing the coming quarters. Indeed, it is highly likely that the CaixaBank Research growth forecasts for 2026 will once again be revised upwards in the coming weeks. However, the data also reveal an underlying challenge. The economy remains resilient and continues to grow, but it is doing so in the context of an ageing Spanish workforce. In the medium term, preserving the economy’s capacity for growth will require further progress to be made in productivity, as well as fully harnessing the potential of an increasingly diverse and ageing workforce.