The Bank of Spain has raised the gross domestic product (GDP) growth forecast for 2026 to 2.2% (four tenths more) and 1.9% (0.2 points) for 2027, after the Spanish economy has shown greater strength than expected during 2025, despite the uncertain international context, and thanks to the strength of household consumption and investment.
The entity directed by José Luis Escrivá presented its winter economic projections this Wednesday, which upwardly revises the three-year forecast horizon of the report, after the latest review of the National Accounting showed greater dynamism in activity than had previously been calculated.
The Bank of Spain points out that the Spanish economy will grow by 2.9% in 2025, three tenths more than in the September forecast and in line with the consensus of analysts. This same Wednesday, the National Institute of Statistics presented the National Accounts data for the third quarter, in which the GDP increased by 0.6%. With the year’s data almost closed, growth is practically confirmed in that figure.
The supervisor significantly raises its forecasts for the next two years, in line with an improvement in the economy on a global scale, thanks to less uncertainty than a few months ago. Trade agreements have cushioned the trade war unleashed by Donald Trump after his return to the White House and, although they will be a factor that significantly limits activity, they will not be as harmful as expected a year ago. Doubts regarding war conflicts in Palestine or Ukraine have also eased, but they could rise in the coming months and remain a risk factor for growth.
Income, employment and salaries trigger consumption
The report, the first by David López Salido as General Director of Economy of the Bank of Spain, explains that the revision is due to both an improvement in the National Accounts data, as well as the “strength of private consumption, which has exceeded expectations” and an “investment cycle that remains robust”, especially in the case of 2026.
“The dynamism of consumption would be reflecting the improvement in financial conditions for consumer loans, as well as the rebound in consumer confidence in an environment of dynamism in employment and increases in household wealth, which could prolong this trend in the coming quarters,” the document states.
This improvement would be translating above all into the consumption of durable goods (such as cars or household appliances), a factor that would be “behind the resilience and importance of internal demand supporting growth,” said López Salido during the presentation of the document.
The foreign sector would also have contracted less than anticipated in the middle of this year and exports of non-tourist services would have experienced “significant dynamism.”
It is for all this that the Bank of Spain believes that the Spanish economy will continue to grow at a good pace, well above the rest of the European partners, although it will slow down slightly in the coming years. “Private consumption would be the component with the greatest contribution to growth, driven by household disposable income, employment and migratory flows. However, a gradual slowdown in consumption is anticipated throughout the projection horizon, in line with the expected slowdown of said factors and in a context in which the savings rate, although it would be reduced in the coming years, would remain above its historical average,” the document points out.
Investment, which is accelerating in recent quarters, will remain strong thanks to the deployment of European funds, which expire on August 31, and an improvement in financing conditions thanks to the relaxation of monetary policy. Investment in housing increasingly contributes more to growth. But this heading will slow down in the coming years, as economic activity slows.
The foreign sector will have a downward influence. On the one hand, due to a gradual moderation in the arrival of foreign tourists and exports of non-tourist services. On the other hand, because imports (which have been very dynamic this year) will slow down in the coming years.
Inflation, stronger than expected
The Bank of Spain has revised upwards its inflation forecasts, which will be more ‘sticky’ than they had projected. This year it will close at 2.7% (two tenths more), while in 2026 it will be 2.1% (four tenths more) and 1.9% in 2027. These revisions are explained by a higher than expected inflationary dynamic in September, as well as a higher than estimated salary increase.
Prices grow more in Spain than in neighboring countries, which reduces the competitiveness of the Spanish economy. France is around 0.8% and Germany is above 2%. But the latest data from Spain places the CPI at 3.2%, “standing out above the average consistently,” they emphasize.
The Bank of Spain also strongly raises its job creation forecasts: it will rise by 2.7% this year, 2.0% next year and 1.4% in 2027. The unemployment rate will fall more slowly (10.6% on average in 2025, 10.0% in 2026 and 9.6% in 2027), because the active population will increase at a faster rate, thanks to the immigration.
Regarding public accounts, the supervisor estimates that the Government will meet its deficit target of 2.5% this year and improves its forecast for next year, up to 2.1%. However, the imbalance in public accounts would worsen again in 2027, fundamentally because that year there will be the largest increase in the salary agreement agreed with civil servants. Public debt will fall to below 100% of GDP (99.1%) in 2026, so the State will have completely dissipated the effects of the rise due to the pandemic. In 2027, this ratio will be 98.3% of GDP.
The scenario drawn by the Bank of Spain is not without risks. On the one hand, a greater evolution of wages and business margins could trigger inflation and reduce GDP growth. Housing will be another key factor: if supply responds more intensely, this could spur growth and also prices. And the foreign sector, with so much uncertainty on a global scale, could also torpedo activity. To this we should add the high price on global stock markets: “Recent episodes of financial volatility – associated with technology companies – show the risk of an abrupt correction in the valuation of risky assets.”
Source: www.eldiario.es
