Spain Economic Outlook. December 2025

Summary

Spanish GDP growth will reach 2.9% in 2025, driven by domestic demand and job creation. In 2026 and 2027, the expansion will continue with advances of 2.4% and 2.0%, supported by immigration, lower interest rates, and European funds, although structural challenges persist.

Key points

• Key points:
• The Spanish economy will grow by 0.7% quarter-on-quarter in the fourth quarter of 2025, exceeding the previous quarter, with a more balanced composition of demand and a labor market that will maintain its dynamism.
• The labor force will continue to increase thanks to migratory flows, which will allow the creation of approximately 480,000 jobs on an annual average over the next two years to sustain economic activity.
• Inflation will continue its slow decline to reach 2.5% and 2.2% in 2026 and 2027, which will facilitate the recovery of the purchasing power of wages and support the advance of private consumption by households.
• Housing investment will accelerate supported by solid fundamentals, but sales will remain stable at around 725,000 units per year due to the lack of available product and the increase in prices.
• Fiscal policy will become contractionary from the second half of 2026 due to the depletion of European funds and compliance with fiscal rules, which will require a sustained reduction in public debt.

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