Funcas has made its move and places the growth of the Spanish economy by 2,9% for this fiscal year, an upward adjustment that follows the update of the INE's National Accounts and a slightly less adverse external context than expected. In this new scenario, The expansion is supported more intensely by domestic demand, while the pull of the foreign sector loses steam.
The think tank emphasizes that progress will continue, but at a slower pace, in the coming years: 1,9% in 2026 and 1,7% in 2027Despite the slowdown, Spain remains among the fastest-growing economies in the EU, albeit with a less balanced growth pattern and greater sensitivity to certain bottlenecks.
What changes with the new forecast
The improvement is six-tenths of a percentage point compared to Funcas' previous scenario. According to the foundation, Five-tenths of a percentage point comes from the drag effect after the INE revision and an additional tenth is explained by a lower impact of the US tariff environment than what was discounted weeks ago.
On a quarterly basis, the roadmap points to quarterly growth of 0,6% and 0,5% in the last two periods of the year, to stabilize at around 0,4% throughout 2026. This is a profile compatible with a more mature cycle and a less favorable international environment.
Funcas explains that the Domestic demand will contribute around 3,1 points to growth, with the Your Strategic gaining prominence, with private consumption holding up and public consumption moderating. In parallel, the foreign sector would subtract about 0,2 points, reflecting weaker exports and rising imports.
Engines that lose steam
After two years of great momentum, tourism is beginning to normalize its contribution. Funcas recalls that In 2023 and 2024 it contributed seven-tenths to GDP, while in the first half of 2025 this contribution was around three tenths, less than half. The dynamism persists, but its drive is no longer as distinctive.
El public consumption continues to grow, although its contribution has also decreased from seven-tenths of a percentage point in the last two years to around four-tenths of a percentage point this year. The budget extension and the reduced impetus from European funds explain part of this slowdown.
On the external front, the greatest penetration of Asian imports helps contain prices but widens the trade deficit, while the weakness of key partners such as France and Germany complicates the sale of Spanish products. This shift makes the external demand has gone from adding to subtracting growth in 2025.
Funcas indicates that the Spanish economy maintains a positive differential against the euro zone, but warns that the expansion pattern is now more dependent on domestic demand and, therefore, more sensitive to domestic conditions.
Investment and housing: bottlenecks to watch
La business investment remains below pre-pandemic levels in real terms, although Funcas is confident in a gradual recovery supported by an improving cycle and the deployment of projects linked to European funds. The boost from investment in capital goods will continue to be felt as more projects are executed.
The market dwelling has become a central factor. In the last three years, nearly half a million new homes, but they have only started around 300.000 homes, an imbalance that puts pressure on prices and complicates labor mobility between territories.
Funcas foresees that the construction investment rebound by 4,1% this year, 4,4% next year, and 3% in 2027. This progress will alleviate part of the housing shortage, but the adjustment will be gradual and will not alone resolve supply tensions in the most dynamic areas.
This housing bottleneck has demographic and employment implications: the reference scenario contemplates that the foreign working population increase by 875.000 people between 2025 and 2027, compared to 1.080.000 in the previous three-year period, which means 19% less of incorporation of labor force compared to the previous period.
Employment, prices and public accounts
Funcas estimates the creation of around 550.000 net jobs by 2027, with an unemployment rate that could reach 9,2% by the end of that year, the lowest level since 2007. The challenge is to accelerate the entry of young people into the labor market and facilitate the return to employment of the long-term unemployed.
In prices, the forecast is that the inflation move around 2,5% this year, with still visible pressures in food and services, to converge towards the ECB's 2% target in 2026 and stabilize close to that threshold in 2027, favored by a stronger euro and pent-up energy.
In the tax area, the public deficit would be reduced to 2,8% of GDP this year and would fall two additional tenths between 2026 and 2027, to 2,6%. Public debt would follow a slow downward path, towards around 97,5% of GDP by the end of 2027, still at high levels in historical perspective.
The quarterly path of GDP fits with this picture: 0,6% and 0,5% in the final quarters of the year and around 0,4% per quarter in 2026, shaping an orderly moderation of the cycle with no signs of a sudden stop in the short term.
Risks and possible surprises
Among the downside risks, Funcas cites a uncertain geopolitical environment, trade tensions, and high valuations in financial markets that could be reversed if the US interest rate trajectory doesn't match. In a more interconnected world, Spain would not be immune to global shocks.
On the positive side, the high household savings —above 11% in recent years—could translate into increased consumption if confidence improves, which would boost GDP. However, the persistence of high housing prices is leading many families to set aside resources for purchases, limiting this effect.
The combination of less tourism momentum, moderation of public spending and cooling of the foreign sector explains the expected slowdown, but a rebound in business investment and progress in housing could cushion the adjustment in potential growth in the medium term.
The new Funcas painting leaves a central idea: Spain is growing faster than the European average and is facing a soft landing., although more dependent on domestic demand and with three pending tasks—investment, housing, and deficit—that will determine how much and how the economy expands in the coming years.