Spain's Economy Poised for Strong Growth in 2026 Driven by EU Funds, Immigration, and Housing
Spain is expected to achieve 2.1% GDP growth in 2026, driven by EU funds, immigration, and housing investment, outperforming the Eurozone average.
- • Spain's GDP growth projected at 2.1% in 2026, surpassing Eurozone's 1.0%-1.2%.
- • EU subsidies of €17.5 billion planned for 2026, bolstering growth by 0.6 points.
- • Immigration expected to increase population by 0.8% and support labor market growth.
- • Residential investment to expand with 150,000 new construction permits in 2026.
- • Risks include slow export growth, U.S. tariffs, and global economic uncertainties.
Key details
Spain is set to outpace the Eurozone in economic growth for 2026 with a projected GDP increase of 2.1%, compared to the Eurozone's forecast of just 1.0% to 1.2%, according to CaixaBank Research's 2026 Outlook report. This follows an expected 2.9% growth for Spain in 2025, significantly higher than France's 1.3% and Germany's 0.2%. The robust growth is attributed to several key factors including a substantial execution of European Union subsidies, immigration-driven population growth, and a strong housing market.
A record €17.5 billion in subsidies from the Recovery, Transformation, and Resilience Plan (PRTR) will be executed in 2026, up from €15 billion in 2025, contributing 0.6 percentage points to GDP growth. Immigration is expected to increase Spain's population by 0.8%, providing another half-point contribution to growth and supporting a 2% rise in labor market employment. Private consumption remains the primary engine of growth, fueled by rising disposable income and lower household savings rates as uncertainty diminishes.
Residential investment is also set to expand, with around 150,000 new construction permits anticipated in 2026, an increase from 140,000 in 2025, reflecting continued confidence in the housing sector. The financial environment is predicted to remain favorable, with no new interest rate cuts from the European Central Bank, enabling ongoing access to financing for businesses and households.
However, the report cautions about several risks that might temper Spain's growth. These include sluggish export market expansion of only 1.9%, the adverse effects of U.S. tariffs on European products, and persistent global uncertainties that could restrain investment and consumption decisions. Additionally, while a slight easing of energy prices may alleviate business costs and improve consumer purchasing power, the overall economy may face the complexities of transitioning into a more mature phase.
In summary, Spain's combination of effective utilization of European funds, positive immigration trends, vibrant domestic consumption, and robust housing investment positions it for solid economic growth in 2026, despite external challenges and a shifting economic landscape.
This article was synthesized and translated from native language sources to provide English-speaking readers with local perspectives.