Spain's 2025 Economy Grows 2.8% Fueled by Household Spending and Domestic Demand
Spain’s 2025 GDP grew 2.8%, driven mainly by household consumption and investment despite challenges in productivity and external trade.
- • Spain’s GDP grew 2.8% in 2025, led by a 3.4% rise in household consumption and 6.3% investment growth.
- • Productivity per worker declined 0.3% despite €63 billion of European funds.
- • Wages rose 7.9%, while inflation eased to 2.4% but core inflation stayed at 2.6%.
- • Imports increased faster than exports, negatively impacting Spain’s trade balance for the first time since 2021.
Key details
Spain recorded a robust 2.8% GDP growth in 2025, a slight slowdown from 3.5% in 2024, driven predominantly by a surge in household consumption and domestic demand. The economy's strongest quarterly growth was 0.8% in Q4 2025, highlighting sustained momentum toward year-end. Household consumption climbed 3.4%, significantly bolstering the economy, while investment expanded by 6.3%, with notable rises in machinery (+9%) and construction (+5.2%). January sales data underscores ongoing consumer confidence, with average spending expected at 181 euros, up 17 euros year-on-year, particularly in clothing and footwear.
However, the positive growth contrasts with a 0.3% decline in productivity per worker despite the government's allocation of 63 billion euros in European funds aimed at productivity enhancement. Wages increased by a substantial 7.9%, but concerns linger about sustaining growth amid diminishing productivity and persistent inflation pressures. Inflation eased to 2.4% in January—the lowest since June—though core inflation remained elevated at 2.6%. Import growth outpaced exports by 6.9% versus 3.5%, causing Spain's trade balance to negatively impact GDP for the first time since 2021. The unemployment rate remains at 10%, with Finland taking over the EU's highest unemployment spot.
Economy Minister Carlos Cuerpo noted that while hourly productivity showed a slight 0.4% rise, the overall productivity decline per worker calls for focused policies to balance wage growth with sustainable output. Spain’s economy thus illustrates impressive consumption-driven expansion but faces challenges in productivity and external trade balances moving forward.
This article was translated and synthesized from Spanish sources, providing English-speaking readers with local perspectives.
