Spain’s Economy Grows a Solid 2.8% in 2025 Amid Strong Domestic Demand

Spain closed 2025 with a robust economic growth rate of 2.8%, driven primarily by a surge in domestic demand, according to the National Statistics Institute (INE). The country’s Gross Domestic Product (GDP) expanded by 0.8% in the last quarter alone, marking the highest quarterly growth of the year and pushing the annual advancement to 2.8%. Although this figure fell slightly short of the initial forecasts of around 2.9%, it still represents a strong performance compared to the eurozone’s modest 1.5% growth for the year.

Household consumption rose 3.4% throughout 2025, slightly higher than the 3.1% growth recorded in 2024. Investment also accelerated notably, increasing 6.3% annually, bolstered by a 9% rise in capital goods spending and a 5.2% growth in construction. This dynamic investment profile reflects considerable activity in infrastructure and housing sectors, where construction grew 2.1% quarterly.

Employment strengthened substantially, with a record 22.46 million people employed at year-end and unemployment dipping below 10% for the first time since 2008. Approximately 600,000 new jobs were created in 2025, reflecting a 2.8% year-on-year rise in employment despite a slight decrease in labor productivity for the third consecutive quarter.

However, external demand posed a drag on growth, as imports grew faster than exports during the year, subtracting 0.2 percentage points from GDP growth. The increase in imports was attributed to strong internal consumption and investment, offsetting the positive effects of export growth.

Looking ahead to 2026, economic forecasts predict continuing expansion with moderated growth. BBVA Research expects GDP growth to slow to 2.4%, while CaixaBank Research anticipates around 2.1%. Meanwhile, the Cámara de España projects a more cautious outlook, forecasting GDP growth of 1.9% and employment growth of 1.6%, with the unemployment rate rising slightly to 10.2%. Analysts highlight that reduced fiscal stimulus, the tapering of European funds, and the need for reforms to improve productivity and public debt management will shape Spain’s economic trajectory in the coming year.

This data underscores Spain's resilient internal market and labor conditions amid an uncertain international environment, confirming the country’s position as one of the stronger performers within the eurozone in 2025.