Spain's Economy Continues Growth in Q3 2025, Led by Domestic Demand Despite External Challenges
Spain's GDP grew 0.6% in Q3 2025, driven by domestic demand despite weaker external trade, with strong forecasts for continued growth in 2026.
- • Spain’s GDP increased by 0.6% in Q3 2025, down from 0.7% in Q2.
- • Domestic demand contributed 1.3 points to GDP growth, led by household consumption and investment.
- • The external sector negatively impacted growth, subtracting 0.7 points due to export declines and import growth.
- • Annual GDP growth was 2.8%, the lowest in nearly two years, while government forecasts growth above 2.9% for 2025.
- • Projections for 2026 show continued growth with estimates between 2.2% and 2.6%.
Key details
Spain's economy expanded by 0.6% in the third quarter of 2025, slightly down from 0.7% in Q2, according to data released by the National Institute of Statistics (INE). This marks the ninth consecutive quarter with quarterly growth at or above 0.6%, as well as 21 quarters of uninterrupted increases quarter-on-quarter and 18 straight quarters of annual growth.
The growth was primarily propelled by robust domestic demand which contributed 1.3 points to GDP growth. Household consumption increased by 1.1%, doubling its previous quarter's growth rate, while gross capital formation (investment) rose by 2.1%. Public investment also played a crucial role in bolstering the economy. Conversely, the external sector exerted downward pressure on growth, subtracting 0.7 points amid a 0.6% decline in exports of goods and services and a 1.3% growth in imports.
Year-on-year, the GDP rose by 2.8%, the lowest annual growth rate in almost two years since Q4 2023, and slightly below the 2.9% rate recorded in Q2. At current prices, GDP hit a new high exceeding 422 billion euros, growing 5.7% year-on-year.
The Spanish government has expressed confidence in these results, highlighting the economy's strength and dynamism. The Ministry of Economy projects that Spain will lead among advanced economies with GDP growth of 2.9% or more for 2025. This forecast significantly outpaces the expected 1.4% growth for the European Union as a whole. Looking ahead, Spain’s economy is expected to expand by approximately 1% at the start of 2026, with government estimates for annual growth at 2.2%, and the Bank of Spain raising projections to 2.6% for that year.
The INE report also notes positive quarter-on-quarter growth across all major economic sectors except the primary sector, with construction growing notably by 1.3%. These indicators reflect a strong foundation for sustained economic confidence among businesses, investors, and workers moving into 2026.
This article was synthesized and translated from native language sources to provide English-speaking readers with local perspectives.
