Spain's Economy Set for Continued Growth in 2026 Amid Challenges

Spain's economy is poised to maintain robust growth into 2026, with projections indicating a GDP growth rate of around 2.2% to 2.3%, continuing its role as a leading European economy. According to recent analyses, the strong domestic demand, particularly private consumption expected to rise by 2.8%, will be key in sustaining this momentum, offsetting declines in exports which have weakened recently.

In 2025, Spain achieved a 2.9% GDP growth, substantially outperforming the eurozone average of 1.3%. Household consumption benefitted from increased purchasing power and moderated inflation, while the unemployment rate dropped to 10.4%, its lowest since the 2008 financial crisis. Investment saw a significant increase of 7.6% year-on-year, driven by digitalization and sustainability sectors. Government deficit is set to contract to 2.5% of GDP, in line with European Commission targets.

However, the outlook for 2026 carries some concerns. Exports of goods declined by 1.1% in the summer quarter of 2025, according to BBVA Research, which poses downside risks for growth. Furthermore, rising housing prices, exceeding 10% recently, threaten to constrain the younger population and migrant labor force. The residential property price surge could hamper migration and labor market expansion, adding to economic uncertainties.

Another challenge lies in business investment, which despite growth remains below pre-pandemic levels. The increasing incorporation of digital technologies and artificial intelligence presents both opportunities and risks for employment and productivity. BBVA data shows that in 2025, 20% of EU businesses deployed AI technologies, but the net economic impact in Spain remains uncertain and may depend on broader technological trends, particularly developments in the U.S.

As analysts caution, risks such as export weakness, an aging population, and housing market pressures could slow growth, but strong domestic consumption, supported by rising income levels, offers a solid foundation for continued economic resilience in 2026.