The automotive industry is an important driver of growth and prosperity worldwide due to its contribution (i) in social terms, by facilitating people’s mobility in an efficient, safe and affordable way, and (ii) in economic terms, as a driver of innovation, a generator of good quality jobs and a pillar of international trade. In the case of Spain, it has become a mainstay of our industry and a benchmark on a global scale, thanks to a large production capacity and high productivity resulting from a skilled workforce and a great degree of plant automation. The economic crisis caused by the pandemic has taken its toll on a sector that is in the midst of a technological transformation towards electrification. A necessary transition that will be strongly supported by the Next Generation EU (NGEU) funds.
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With the shock of the COVID-19 outbreak, tourism businesses reduced their activity, destroying a large number of jobs and taking massive advantage of Spain's furlough scheme (ERTE). Tourism supply is now attempting to revive itself. The lifting of mobility restrictions has encouraged a good number of tourist establishments to reopen their doors, even though demand is still low. With the start of the summer season, it is essential for the tourism sector to maintain, and benefit from, its commitment to reactivation as this is the only way to create jobs again.
The Spanish agrifood sector has begun to recover after two years of decline, thanks to the moderation of production costs and the easing of the drought. However, the effects of both of these shocks still persist and the sector continues to face major challenges that are limiting its structural growth capacity.
The US’ tariff hikes of between 10 and 20 pps should have a limited impact on the Spanish economy, less than in other advanced economies, but some sectors could be more affected.
In June 2016, the United Kingdom’s vote in favour of leaving the European Union (EU) opened up a new scenario for the British economy that could have important repercussions for the Spanish economy and particularly for the tourism industry, which receives around 16 million British tourists a year1. In this article we examine the impact of Brexit on the number of British tourists visiting Spain and its potential impact in the future under different EU exit scenarios.
- 1This figure represents nearly 22% of Spain’s total inbound tourism (2018 data).
Population growth has been one of the main factors that has driven the demand for housing in Spain in recent quarters and has played a fundamental role in sustaining home prices in a context of tightening financing conditions. In this article, we analyse the relationship between population growth and the evolution of home prices in the last two years. Population flows have been concentrated in large urban areas and tourist areas, and have caused a wide dispersion in the growth of home prices between the most buoyant areas of the country and those suffering depopulation.
The recent boom in Spain’s international tourism is having a very positive impact on the growth of the economy and of employment. However, it also has repercussions for the resident population that are not always positive, such as greater congestion due to the larger influx of tourists in certain parts of Spain. This has rekindled the debate on the need to move towards higher quality tourism.
Spain’s agrifood sector is typically focused on exports: The range of agrifood products exported by Spain is getting wider and covering more destinations. However, another dimension should also be taken into account: export complexity, a concept that measures the knowledge intensity required to produce exported goods. Because not only the volume of exports is important but also what is exported.
The supply of housing continues to be insufficient to absorb demand, which continues to grow strongly due to the formation of new households. This housing deficit and the pressure it exerts on prices underscores the need to accelerate the construction of affordable housing.
The Spanish housing market is in the midst of a boom, driven by lower interest rates, the improvement in purchasing power and population growth. Demand continues to grow sharply, with foreign buyers playing a notable role, while supply is also steadily gaining traction, although it still does not compensate for the housing deficit accumulated since 2021. House prices continue to accelerate, now exceeding the peak reached in 2007 in nominal terms, and signs of overvaluation are beginning to become apparent. However, the current context differs from the one prior to the bursting of the housing bubble: rather than an oversupply, there is a serious housing deficit, and that is what primarily explains the pressure on prices; moreover, households, the construction and developer sector, and the financial system are in a strong financial position. We expect prices and sales to remain dynamic in the coming quarters, underscoring the need to increase the supply of affordable housing.
In recent years, the rise in house prices has intensified, becoming one of the main economic and social concerns in Spain. This phenomenon is largely explained by the housing deficit that has accumulated since 2021 due to a persistent gap between supply and demand. This housing deficit is significant (we estimate it amounts to around 4% of the stock of primary homes in Spain), and higher in certain provinces, major cities and tourist areas: precisely where we find the greatest upward pressures on prices.
The demand for housing among non-resident foreign buyers has grown sharply in recent years, especially after the pandemic, consolidating itself as one of the main drivers of Spain's real estate market. This boom is a response to several attractions which Spain has to offer, such as economic stability, the perception of security, good connectivity and a real estate offer that remains competitive. The profile of these buyers and the areas of interest have diversified, with an increase in the variety of nationalities and chosen locations: the influence of the United Kingdom has reduced, Poland is in the top 5 buyer nationalities, interest from the US and Latin America is on the rise, and new centres of interest are emerging in less traditional areas, such as Castellón, Asturias, Huelva and Córdoba.
This year and the next, the Spanish economy will enjoy strong expansionary momentum, supported by robust domestic demand and competitive advantages over its main European partners. Despite a challenging global environment, we forecast GDP growth of 2.9% in 2025 and 2.1% in 2026, supported by, among other factors, improved financial conditions supporting continued growth in private consumption and investment, population growth and relatively competitive energy costs. The sectoral analysis also reveals a broad-based expansionary cycle, which ranges from the best-performing sectors such as construction and pharmaceuticals to those that will grow at a more moderate pace, e.g. textiles and motor vehicles.
Investment is a key determinant of long-term economic growth, due to both its direct contribution to aggregate demand and its impact on competitiveness and productivity. In recent years, business investment in Spain has shown significant divergence by sector and region, as well as a notable change in its composition, with a growing prominence of intangible assets (R&D, software, intellectual property, etc.), especially in advanced services and larger companies. This highlights the central role of digitalisation in transforming the productive base of Spain’s economy and in narrowing the gap with the most innovative countries.
The Spanish economy is facing 2026 from a strong starting position, supported by the momentum of buoyant growth in 2025, a dynamic labour market, strong domestic demand and relatively contained inflation despite the energy shock. The outbreak of the war in Iran has introduced a new supply shock, increasing uncertainty and forcing us to revise downwards the projected GDP growth for this year to 2.1%, 0.3 pps below the previous forecast. In any case, the intensity of the slowdown is expected to vary depending on the sector. Manufacturing sectors, which are more energy-intensive, outward-facing, and with a weaker cyclical position, will be the most affected. In contrast, services and other activities linked to domestic demand are starting from a more solid position and are less exposed.
The current conflict between Iran, the US and Israel marks a new supply shock that is once again straining global value chains. This episode is the latest in a string of disruptions to global trade, such as the Trump administration’s tariff policy, the energy crisis triggered by Russia’s invasion of Ukraine and the COVID-19 pandemic. It also reinforces the need to diversify supply markets, avoiding major unilateral dependencies, and to work towards greater European production capacity. This message is particularly relevant in strategic areas for medium- and long-term growth, such as technology, healthcare, defence, and the dual green and digital transition.
Spain has experienced a sustained increase in business entrepreneurship in recent years, reaching its highest level since 2012. However, business creation remains below the European average and significant structural challenges persist: a high early failure rate among new businesses, a strong geographical concentration of entrepreneurship and a limited focus on high value-added sectors. Despite these weaknesses, encouraging signs are emerging in sectors linked to digitalisation and the Economy 4.0. The major challenge lies in harnessing this dynamism to ensure that more projects survive, consolidate, and are directed towards higher-productivity sectors, so that all this can translate into more solid, balanced, and lasting economic growth.
Agrifood exports have continued to perform very well during the pandemic within a context where international trade has been particularly hard hit by the crisis. Swine meat, fruit and some fresh vegetables have been in greatest demand, while the Basque Country and especially Aragon have been the regions posting the largest growth in exports between January and July 2020. Despite this favourable performance to date, however, the sector is keeping a close eye on developments in global trade tensions, especially between the US and EU and the Brexit negotiations.
In the current expansionary cycle of the Spanish real estate market, there is a marked increase in the dispersion of house prices across the country, unlike in the real estate boom prior to 2008. Since 2015, tourist municipalities and large cities have led the growth in prices. In contrast, rural areas and small towns have experienced more moderate price increases. This behaviour reinforces the view that, in this cycle, price formation is responding to the specific supply and demand dynamics of each area. In major cities, the strong price pressures in the centres are spreading to increasingly municipalities in the metropolitan areas.