The Bank of Spain has given a new optimistic twist to its diagnosis of the national economy. revise their growth forecasts upwards for 2025 and 2026After several months of better-than-expected data, the supervisor places Spain among the most dynamic economies in the eurozone, with GDP growth clearly exceeding that of its European partners.
According to the latest projections, the institution he heads Jose Luis Escrivá It expects that activity will continue to grow at a good pace in the coming years, although with a gradual slowdown towards rates closer to potential growth of the country. The underlying message is clear: the current momentum is robust, but not infinite, and will gradually normalize.
GDP revised upwards: Spain doubles the pace of the eurozone
The Bank of Spain's new macroeconomic framework places the GDP growth at 2,9% in 2025, three tenths higher than in their September projections, and in 2,2% in 20264 tenths higher than what it estimated just three months ago. By 2027, it anticipates an increase of 1,9%, also two tenths higher than the previous forecast.
With these figures, the Spanish economy This would more than double the average growth forecast for the eurozone. in 2025, in a context where neighboring countries are experiencing significantly lower growth rates. The European Central Bank has also improved its outlook for the bloc, but continues to project a much more moderate pace of growth than Spain's, around 1,4% in 2025 and 1,2% in 2026.
The supervisor attributes this positive review to several combined factors. On the one hand, the latest national accounts data have confirmed significant dynamism in the second half of the year, with quarterly GDP growth between 0,6% and 0,7%On the other hand, the National Institute of Statistics (INE) revised upwards the previous growth, raising the starting point and clearing up some of the doubts that existed about the intensity of the recovery.
Furthermore, the new forecast from the Bank of Spain It practically coincides with that of the Governmentwhich also projects growth of 2,9% for 2025 and 2,2% for 2026. International organizations such as the International Monetary Fund, the European Commission, and the OECD have been aligning themselves in recent weeks around that same threshold of 2,9% for the Spanish economy in 2025.
During the presentation of the report, the new Director General of Economics at the Bank of Spain, José David (David) López SalidoHe emphasized that the economy has the capacity to grow above its potential rate for at least the next three yearsThe potential, according to the organization, is around 2%, so the country would be taking advantage of a somewhat more intense expansion cycle than usual.
Private consumption and investment, the main drivers of growth
At the heart of this resurgence lies the domestic demandand especially the private consumptionThe Bank of Spain highlights that household spending It has far exceeded expectations, driven by job creation, wage increases, improved disposable income and the arrival of immigrants, which expands the consumer base.
Households have shown particularly dynamic behavior in consumption durable goods —such as automobiles, furniture, or household appliances— and in services linked to new technologies, construction, or telecommunications. All of this occurs in a context where the The savings rate remains at unusually high levels.However, the Bank expects that it will gradually normalize in the coming years, helping to sustain spending.
La Your Strategic This constitutes the other major component of the positive scenario. The institution anticipates that gross fixed capital formation will continue to... robust path, supported by several elements: the deployment of the European funds Next Generation EUwhich will continue to be channeled until 2026; some relatively favorable financial conditions, in an environment of stable interest rates around 2%; and the greater dynamism of construction, both in new construction and in infrastructure rehabilitation and improvement projects.
However, the organization also points out that, over time, both consumption and investment they will gradually lose some steamThe projection includes a gradual slowdown of GDP towards rates closer to that potential 2%, as certain impulses—such as the rebound effect after the pandemic or the maximum impact of European funds—are exhausted and household savings behavior normalizes.
In contrast to the strength of private consumption and investment, the public consumption It will remain practically stable, with no major additional expansions on the forecast horizon. net external demandFor its part, it will continue to subtract from growth in 2025 and 2026, before contributing slightly in 2027.
External sector: services on the rise and goods facing more uncertainty
The balance sheet for the external sector presents both positive and negative aspects. On the positive side, the Bank of Spain highlights the dense dynamism of non-tourism service exportsSectors such as finance, information technology, telecommunications, construction, and certain business services have gained importance in foreign trade, partially offsetting the decline in other sectors.
In parallel, a gradual normalization of international tourist arrivals Following the strong rebound recorded after the pandemic, the tourism boom has been key in recent years, but the supervisor assumes that growth rates will not be able to remain so high and will tend to stabilize at more sustainable levels.
On the less positive side, the report warns of a weaker performance of goods exportsdragged down by sectors such as automotive and gas in their sales to euro area partners. Improvements in sectors like pharmaceuticals are not enough on their own to offset these declines, so the Bank It slightly lowers its export forecasts for goods and services for 2026although it maintains a rebound for 2027.
Another relevant factor is the evolution of the global context. The entity observes that the Risks stemming from the trade war have eased Following the latest tariff agreements, the probability of extreme scenarios has decreased. However, it draws attention to the overheating of technology stock markets linked to artificial intelligence and the danger of a sharp correction in the valuation of risk assets.
On this international stage, the following also stands out: China's competitive advantageSpain, which maintains very low inflation—clearly below 1%—compared to rates around 3% in the United States and 2% in the eurozone. The Bank of Spain detects signs that Some of the Chinese exports that previously went to the US are now being redirected towards Europe, and in particular to Spain., which may affect certain national industrial sectors.
Inflation: somewhat higher in the short term, controlled in the medium term
The other major section of the report focuses on price trends. The Bank of Spain forecasts that general inflation will be at 2,7% in 2025, before moderating to 2,1% in 2026 and 1,9% in 2027In all cases, these figures are very close to the 2% target set by the European Central Bank, although slightly above it in the short term.
Compared to the previous projection exercise, the rates for 2025 and 2026 are revised upwards by two and four tenthsrespectively, while the 2027 figure is reduced by five tenths. This latter decrease is mainly due to delay in the entry into force of the new European emissions trading system (ETS2), initially planned for 2027 and now postponed to 2028, which implies less pressure on energy prices in the final stretch of the analyzed horizon.
The agency explains that the higher inflation projected for 2025 has an almost mechanical component: The price trajectory observed recently has been somewhat higher than expectedTherefore, even without further changes to the assumptions, the annual average rises by a few tenths. For 2026, three elements come into play: the statistical carryover of current prices, some interest rates slightly lower than estimated in September —which tends to sustain demand— and the combination of Solid private consumption and rising wages.
La Underlying inflation —which excludes energy and unprocessed food— also remains at levels slightly above the ECB's target, although clearly declining: 2,6% in 2025, 2,4% in 2026 and 2,1% in 2027The Bank of Spain links this resilience of underlying prices, above all, to the evolution of the services sector and the partial transmission of wage increases to final prices.
Regarding the inflation differential with the eurozone, currently slightly more than one percentage pointThe supervisor predicts that it will it will gradually narrowAs energy pressure eases, the gap will tend to narrow, although the intensity of the adjustment will depend largely on how wages and profit margins evolve in Spain compared to the rest of the bloc.
This entire price scenario is framed within a monetary environment in which the The European Central Bank has opted to maintain interest rates.And Escrivá himself has indicated that, for now, the 2% level is comfortable for them. This stability, he emphasizes, contributes to a favorable financing environment. more predictable for families and businesses, which fits with the Bank of Spain's relatively benign projections for activity.
Employment and unemployment: slower but steady job creation
The report devotes a large section to the labor market. The Bank of Spain predicts that the job creation continues on a positive trendAlthough with a gradual moderation compared to recent years. By 2025, an increase in the number of employed is expected. 2,7%, which would go down to 2% in 2026 and 1,4% in 2027.
This pattern is consistent with a productivity per worker that, according to the organization, has been very restrained in the recent phase and will begin to improve gradually from 2026 onwards, stabilizing around 0,5% in 2027The combination of more employment and slight productivity gains fits with the somewhat more moderate growth profile outlined in the central scenario.
In parallel, the the unemployment rate would continue to fallAlthough at a slower pace than in the initial recovery phase following the pandemic. The Bank of Spain places unemployment at around 10,6% in 2025 and 10% in 2026, to fall to the 9,6% in 2027If these predictions come true, Spain would fall steadily below the 10% unemployment threshold for the first time since 2008, a symbolic milestone in a labor market traditionally marked by very high unemployment rates.
This evolution is accompanied by moderate growth in remuneration per employeewhich would tend to settle around 3% by the end of the projection horizon. The Bank of Spain insists that one of the key risks lies in the fact that wage increases are greater than expected, especially after the significant increase in public sector salaries agreed for the coming years, which could lead to Higher inflation and lower competitiveness if it is not offset by greater productivity gains.
Another factor to take into account is the increase in the working populationThis increase in the labor supply explains why the unemployment rate is not falling faster, despite the positive performance of employment, and makes it a structural element to monitor in the coming years.
Housing: a growing risk and at the same time a potential lever for growth
The situation of housing market It occupies a prominent place among the Bank of Spain's areas of concern. The institution detects a Clear tension between a limited supply and a very dynamic demandDriven by the creation of new households, population growth, and migration flows, the result has been a rise in residential prices that, in some segments, are reaching double digits.
Recent data shows mixed signals. On the one hand, the entity observes a moderation in housing investment during the last part of the year, reflected in the slowdown of construction execution indicators. On the other hand, the number of members in the construction And the increase in cement consumption suggests that the activity remains strong, and could even Gain momentum if building incentives are strengthened.
The Bank of Spain considers that a more intense increase in residential supply This could have a dual effect: on the one hand, it would help to alleviate price pressures and improve access to housing; on the other, it would higher GDP growth and more investmentProvided it is managed in an orderly and sustainable manner. However, it warns that if the adjustment occurs primarily through prices and wages in the sector, without a sufficient increase in supply, housing costs will rise. could become a burden for consumption and for labor mobility.
Escrivá himself has defended the need for a coordinated action between the central government, the autonomous communities and the municipalities To address the housing problem, it's important to remember that responsibilities are shared and that the solution requires a joint strategy. According to the Bank's analysis, increasing the affordable housing for low and lower-middle income householdswhere tensions are more pronounced.
In this context, housing is configured as one of the main factors of uncertainty For growth forecasts: it can act as a brake if prices continue to spiral out of control, but also as opportunity to strengthen the activity if construction can be boosted and a better balance between supply and demand can be achieved.
Public accounts, deficit and debt: gradual improvement with some shadows
The improvement in the macroeconomic environment has a direct impact on the Public financesThe Bank of Spain predicts that deficit of the administrations is located around the 2,5% of GDP in 2025 and is reduced to 2,1% in 2026, in line with the commitments made to the European Commission under the new tax rules.
From 2027 onwards, however, the organization projects a slight increase in the deficit to 2,5%, mainly due to the impact of multi-year salary agreement with public employeesCompared to the previous assumption of inertial increases of 2% per year, the new agreement implies higher spending of approximately 0,05 points of GDP in 2025, virtually zero in 2026 and 0,37 points in 2027This increases personnel costs and affects the path to fiscal consolidation.
On the positive side, the Bank of Spain revises downwards the public debt-to-GDP ratioThanks to stronger nominal GDP growth and interest rates that, for the moment, are not putting significant upward pressure on the financial burden, the institution estimates that the debt will close 2025 at around 100,6% of GDP, it will drop to approximately 99,1% in 2026 and will be located near the 98,3% in 2027, approaching pre-pandemic levels again.
Despite this improvement, the supervisor notes that the level of indebtedness remains very high in historical perspective and that any significant deviation from the spending path, especially from 2027 onwards, could complicate compliance with the new European fiscal rules. Among the risks mentioned are: potential more expansionary fiscal policy decisions or the need to respond to unforeseen shocks, both internal and external.
Meanwhile, the strong economy has allowed the government to announce measures such as the 2,7% increase in contributory pensions and the more than 7% increase in minimum pensions in 2026These decisions are framed within the revaluation of benefits in line with the CPI and must also fit within the budgetary framework of the coming years.
Risks and uncertainty scenario: wages, margins and global context
Although the overall tone of the report is constructive, the Bank of Spain devotes significant space to the risks that could divert the economy from this central scenarioAmong the internal elements, one of the most prominent is the evolution of the wages and profit marginsIf the wage increases agreed upon in collective bargaining agreements—especially in the public sector—are passed on too intensely to the economy as a whole, they could generate greater inflationary pressures and force companies to adjust their margins or their employment levels.
The Bank warns that a scenario of higher wage increases without a corresponding increase in productivity This could lead to a loss of competitiveness, lower growth, and higher inflation. It also does not rule out mixed situations in which certain measures are Positive for GDP but bullish for prices, as could happen if the construction of new housing is accelerated sharply to respond to the current shortage.
On the external front, despite the reduction in risks related to the trade war and tariffsThe report keeps the evolution of the global geopolitics and of the financial markets. The “recent episodes of volatility"The expectations surrounding artificial intelligence, associating with technology companies, are, according to the institution, a sign of..." danger of abrupt corrections in risk assets, with potential impact on confidence and investment.
The entity also emphasizes that the External demand for non-tourism services —one of the current pillars of growth— could be less favorable than expected If the international context deteriorates, a slowdown in this sector, coupled with reduced dynamism in goods exports, would have significant effects on the trade balance and on GDP growth.
In any case, the Bank of Spain maintains that, in the short term, The risks associated with the activity are reasonably balanced.While in the medium term they are leaning "slightly downwards", both due to macroeconomic uncertainty and the possible evolution of financial markets and geopolitical tensions.
The picture painted by the latest projections from the Bank of Spain is that of an economy that It maintains a solid growth rate, above its potential and the European average.Driven by private consumption, investment and the pull of non-tourist services, but which will have to contend with Structural challenges such as services inflation, housing market adjustment, high debt, and the need for wages, productivity, and profit margins to find a balance that allows for sustained expansion without creating new imbalances.
