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The Spanish economy has kicked off 2025 with widespread growth, albeit slightly more moderate than that of the previous year. Despite the global challenges, such as the protectionist shift in the US, half of its sectors are showing signs of expansion, most notably the chemicals and pharmaceutical industry. This buoyancy across the various sectors, coupled with the country’s competitive advantage in renewable energies, bolsters the resilience of the economy amid an uncertain international environment.

The Vision for Agriculture and Food, presented in February 2025 by the European Commission, starts with the following observation: the European agrifood sector must remain competitive in a more fragmented geopolitical environment, adapt to climate change and maintain its social legitimacy and its role in rural areas. Specifically, it acknowledges the sector’s strategic role, proposes a simpler, fairer and results-oriented Common Agricultural Policy (CAP), and focuses on agricultural income, generational renewal, climate resilience, innovation, bioeconomy and a more balanced negotiating position for farmers within the food chain.

The most recent real estate market data show that the upward trend in demand and house prices has been accentuated in the early stages of 2022, in line with the positive inertia that the Spanish economy has maintained despite the adverse context. However, in the medium term the outlook is that the real estate market will tend to slow down.

The shortage of housing supply in a context of strong demand will remain one of the main challenges of Spain’s real estate market in 2025, although it is not among the most overvalued markets in the European Union.  

The outbreak of the pandemic in early 2020 has had unprecedented repercussions in many areas of the economy. One of these has been household consumption, the main component of GDP and traditionally considered an indicator of the health of the economy and the well-being of society. Because of the restrictions on business and mobility during the health crisis caused by COVID-19, the drop in consumption was much greater than during previous crises. The positive side is that once restrictions were lifted, Spain’s consumption has rebounded more sharply in 2021 than in the past. In fact, in October the consumption tracker produced by CaixaBank Research using internal data was already 13% higher than in the same month of 2019.

Spain’s real estate market is slowing down but at a more moderate pace than predicted in the scenario published in last December’s Real Estate Sector Report.

The CaixaBank Research Sectoral Indicator is a synthetic indicator that encompasses information from 17 variables into a single indicator. It is a monthly indicator and it compiles data dating back to January 2011. It is calculated for 24 economic sectors, including the four major ones: agriculture, forestry and fishing, manufacturing, construction and services.

At this point in the pandemic, no-one is in any doubt that the economic scenario largely depends on how the health situation will develop. After a period of relative normality during the summer, a large number of European countries have had to step up restrictions on people’s movements and business activity. The economic impact of this second wave is considerable, although clearly less than the effect of the strict lockdowns imposed in Q2. This situation has worsened the economic outlook for the beginning of 2021, although the outlook for the spring is more promising with hopes being placed on the availability of a COVID-19 vaccine and other measures to help strengthen the health strategy (such as the low-cost, rapid testing of large numbers of the population).

Activity in Spain’s real estate market is recovering from its extraordinary slump during the first lockdown. In Q3 2020, house sales and new building permits recovered much of the ground lost, a positive trend we expect to consolidate in 2021. Moreover, the impact of the crisis on house prices has been relatively moderate so far, although we expect these will continue to adjust in the latter part of 2020 and the first half of 2021. In particular, CaixaBank Research’s new house price forecasting models at the level of province, based on large amounts of information (big data) and applying machine learning techniques, predict that house prices will fall in 7 out of 10 Spanish provinces in 2021 and grow very moderately in the rest.

However, it is important to remember that the economic impact of COVID-19 is huge and the effects of the pandemic on the sector will take time to disappear completely. The Recovery Plan for Europe, or Next Generation EU (NGEU), allocated a substantial sum of 750 billion euros, will be decisive in helping to boost the recovery. One of the EU’s main targets, which this recovery plan aims to support significantly, is the ecological transition to become climate-neutral by 2050. In the EU, buildings are responsible for emitting about 40% of the gases that cause global warming. The involvement and commitment of the construction industry is therefore essential to reduce greenhouse gas emissions to the agreed targets, while more energy-efficient «smart» buildings also support another of the Commission’s key targets: digital transition.

These European funds represent a unique opportunity to modernise Spain’s economy, which will receive around 72 billion euros in non-refundable transfers between 2021 and 2026, equivalent to 5.8% of its GDP in 2019. About 6% of the European NGEU funds will be aimed at renovating housing, tripling public investment in this area. In particular, the government plans to recondition 500,000 homes between 2021 and 2023. This target, if achieved, would be very positive for the sector but it is highly ambitious since it requires multiplying the current reconditioning rate by six in just three years.

In addition to renovations, another priority for housing policy over the coming years is the improvement of social housing. The severe economic and social impact of the COVID-19 crisis has highlighted the need to provide a large number of rented social housing to resolve the current shortage and be able to ensure the most vulnerable sections of the population have somewhere to live. Policies that should drive a green, social and digital recovery.

COVID-19 is having a huge impact on economic activity in Spain and, in particular, on the tourism industry. At CaixaBank Research we expect GDP to fall by between 13% and 15% in 2020, not returning to its pre-crisis levels until 2023. The outlook in 2020 is even grimmer for Spain's tourism industry as it is one of the sectors hardest hit by the pandemic.

The Spanish economy is currently undergoing a period of buoyant growth. With the effects of the pandemic and the energy crisis now behind it, it is now in a strong expansionary phase, marked by balanced and widespread growth across sectors

In 2021, a milestone was reached that was hard to imagine a year ago: the mass vaccination of a large part of the population in advanced countries. Although new waves of infection are occurring, in those countries where population vaccination levels are higher it is likely that activity and travel restrictions as severe as those that have set the pace of economic development since the outbreak of the pandemic will not have to be reimposed.

The arrival of the pandemic was a severe blow to a sector that was already going through a delicate situation due to trade tensions and disruptions in the automotive industry at a European level. The fall in manufacturing activity in Q2 2020 was sharper than the decline in the economy as a whole, although its subsequent recovery was more vigorous. Some sectors, such as textiles, footwear and beverages and even automobiles, were hit hard and are recovering more slowly, while other sectors, such as pharmaceuticals and food, were hardly affected at all. The lifting of restrictions, progress made with vaccinations and reduction in uncertainty will help to revive consumption and flows of international tourists, all of which are vital to our economy, and this in turn will support manufacturing.