The Spanish economy after Hormuz

The global economy, including Spain’s, has spent recent months fixated on developments in the conflict involving the US, Israel and Iran. The closure of the Strait of Hormuz, a vital artery for global energy flows, could have slowed growth or even caused a recession if it had been prolonged. The agreement reached is fragile and uncertainty remains high, but the Strait is gradually returning to normal and in June energy prices quickly corrected to close to pre-conflict levels. It is worth taking stock of the impact of the shock to date and assessing how the Spanish economy could fare going forward if the agreement holds.

The most visible and immediate effect of the conflict has been on inflation, which, between March and June, remained well above what had been expected at the beginning of the year. It has exceeded 3% and would probably have approached 4% had it not been for the measures adopted by the government. This upturn has impacted both business confidence and household consumption, which followed a U-shaped pattern between March and June. On the business side, this is reflected by the Purchasing Managers’ Index (PMI), and on the consumer side, by the real-time indicator developed by CaixaBank Research. Both registered sharp declines as the conflict seemed to become entrenched and energy prices soared, and both have recovered in June, coinciding with the agreement and the correction in energy prices. The PMI has returned to levels similar to those of January and once again indicates a dynamic growth rate. Domestic consumption, after a sluggish May, has been regaining momentum throughout June.

The labour market tends to respond more slowly to macroeconomic shocks. Changing jobs or hiring an employee are usually decisions planned in advance. In this case, the shock has been neither intense nor persistent enough to alter the underlying dynamics, and Q2 has ended with still broadly dynamic employment growth comparable to that of Q1. Furthermore, this dynamism has been bolstered by the process of regularising immigrants, resulting in total employment actually growing slightly above the rate observed in Q1.

Finally, it is worth highlighting the only area where the conflict has had a positive impact from a macroeconomic perspective: the tourism sector. Following the strong growth of recent years, we expected tourist flows to continue to increase in 2026, but at a more moderate rate. This was indeed the trend up until the outbreak of the conflict, at which point the sector’s growth once again accelerated. Spain is perceived as one of the safest destinations and, as on previous occasions, many European tourists have changed their plans in order to visit it. The latest data suggest that the number of international tourists could well exceed 100 million this year.

Overall, GDP is likely to close the second quarter with growth slightly below what was anticipated at the start of the year, but higher than in the current scenario, which assumed high energy prices for longer. More importantly, if the agreement holds and energy prices do not rebound, the post-Hormuz Spanish economy has fuel to continue growing at a dynamic pace.