European Commission Revises Spain’s Economic Growth and Deficit Forecasts Upward for 2025-2026

The European Commission has upgraded its economic outlook for Spain, projecting a 2.9% GDP growth rate in 2025, up from its earlier estimate of 2.6%. This improved forecast positions Spain as the strongest major economy in the eurozone for the coming years, surpassing expectations including those of the Spanish government. The growth is expected to ease to 2.3% in 2026 and further to 2% in 2027.

Simultaneously, the Commission revised Spain’s public deficit forecast, predicting a decrease to 2.5% of GDP in 2025 from an earlier 2.8% estimate, and further decline to 2.1% in 2026, where it is expected to stabilize in 2027. The unemployment rate is also anticipated to improve, dropping from 10.4% in 2025 to 9.6% by 2027, though it will remain one of the highest in the European Union.

Robust internal demand, driven primarily by household consumption and increased investment, underpins this growth. Additional factors include an increase in purchasing power and employment largely fueled by sustained immigration. However, risks persist, notably the potential impact of weaker economic activity among Spain’s key trading partners, which could affect tourism and private sector confidence. A pronounced slowdown in immigration could also hinder labor market dynamics.

Inflation pressures are expected to moderate moderately, with a revised inflation forecast of 2.6% for Spain this year, slightly above prior estimates. Food prices and services are projected to ease, guiding inflation downward in the coming years.

These forecasts contrast with the European Union's overall outlook, which predicts a 1.4% GDP growth rate in 2025 for the EU, boosted by a trade agreement with the United States, and a eurozone inflation rate holding steady at around 2.1%. Spain’s superior growth rate reflects comparatively stronger internal demand and economic dynamism, although challenges remain from external economic uncertainties.

Carlos Cuerpo, Spain's Minister of Economy, indicated that the Council of Ministers plans to officially incorporate the revised growth forecast in its next session, reflecting confidence in Spain’s economic trajectory despite global risks.