The Spanish economy holds up

This month, CaixaBank Research has updated its forecast scenario for the Spanish economy. Although growth is now expected to be slightly lower than previously anticipated, the message remains broadly positive. In particular, the new scenario envisages a gradual moderation of GDP growth: following the solid 3.2% recorded in 2024, it is expected to grow by 2.4% in 2025, 0.1 pp less than in the previous scenario, and by 2.0% in 2026, also 0.1 pp lower than previously anticipated.

These figures stand out for several reasons. Firstly, because they reflect buoyant economic growth, above the historical average of 1.8% between 2000 and 2024. Secondly, because this growth is expected to be widespread across the various sectors. Thirdly, because this is occurring in an unfavourable international context, marked by geopolitical and trade tensions. Finally, because the expected growth far exceeds that of the major developed economies: this year, more than double that of the euro area and surpassing US growth by 1 pp.

The moderation of the growth rate is mainly a response to the exhaustion of some of the factors that have been driving economic activity in recent quarters. Exports of non-tourism goods and services have lost momentum amid the weakness shown by Spain’s major trading partners, while growth in tourism and public consumption is normalising. Added to this is the impact of the uncertainty generated by the new US administration’s erratic economic policy and the increase in tariffs on exports to that country. In the previous scenario, an impact of 0.2 pps on growth in 2025 was already contemplated, assuming a moderate increase in tariffs to 10% and an upturn in uncertainty until the middle of the year. However, the uncertainty has been greater than expected and the global economy weaker, resulting in a downward revision of an additional 0.1 pp both in 2025 and again in 2026.

Despite these adverse factors, there are several elements sustaining the Spanish economy’s dynamic growth. Most notably, these include household consumption and investment, which are being supported by a quicker than expected decline in inflation – thanks to falling energy prices – as well as lower interest rates and a healthy financial situation among both firms and households.

Demographic dynamics and the gradual execution of the European NGEU funds also continue to boost domestic demand. All these elements should consolidate the good figures observed in recent months.

The latest indicators confirm that economic activity remains robust in Q2 of this year. GDP growth is likely to be only slightly below the strong figure recorded in Q1. Job creation remains buoyant, with rates similar to those recorded at the beginning of the year. The CaixaBankResearch Real-Time Consumption Indicator also remains at high levels. Moreover, as set out in the recently published Sectoral Observatory, 50% of the economy’s sectors are currently expanding, with growth rates in excess of their historical average, compared to a figure of 20% last year. Only 24% of the sectors are growing below their long-term trend, versus 34% the previous year. In addition, according to our estimates, no sector is currently in contraction.

Beyond the uncertain international environment and the loss of momentum in some growth drivers, the main structural challenge facing the Spanish economy in the short and medium term lies in the real estate market. The sharp recovery in demand – driven by the improvement in household purchasing power, lower interest rates and strong foreign demand – has coincided with a slow-reacting supply. Although new construction licences are picking up, the pace of construction remains insufficient to absorb the housing deficit that has accumulated in recent years. As set out in the Focus «The CaixaBank Research real estate clock: the Spanish real estate market picks up the pace» in this same report, this imbalance is exerting increasing pressure on prices, which have accelerated notably in recent quarters. According to the new CaixaBank Research forecasts, the house prices could grow by 9.0% in 2025 and by 5.7% in 2026 (according to the indicator published by the Ministry of Housing and Urban Agenda, MIVAU), well above the expected growth of disposable income per household. This trend threatens to exacerbate the housing affordability problem, particularly in areas with higher demand, and reinforces the need to accelerate the construction of affordable housing as a means to ensure inclusive and sustainable economic growth.