Spain's Economy Shines Amid Growth Forecast Increases and Structural Challenges
CaixaBank and experts report Spain’s robust economic growth for 2025-2026 amid challenges of unemployment and productivity.
- • CaixaBank Research raised Spain's growth forecast to 2.9% in 2025 and 2.1% in 2026.
- • Tourism contributes 12% to GDP with expected 100 million visitors by 2025.
- • High immigration flows have strengthened employment but sustainability concerns remain.
- • Challenges include high youth unemployment (26%) and moderate per capita growth (3.1%).
- • Inflation forecast aligns with ECB targets, supporting stable economic outlook.
Key details
Spain's economy continues to impress with upward revisions in growth forecasts and recognition as one of Europe's strongest economic performers. CaixaBank Research recently upgraded its economic growth forecast for Spain to 2.9% in 2025, up from 2.4%, and increased the 2026 projection slightly to 2.1% from 2%, reflecting the country's resilience despite ongoing international uncertainties. The report highlights key growth drivers such as reduced European Central Bank interest rates, lower energy prices, and strong immigration flows averaging 600,000 working-age individuals annually, which have collectively bolstered employment to over 21 million people.
The tourism sector remains pivotal, contributing 12% to GDP, with expectations of reaching 100 million visitors by 2025. This sector, alongside Spain's transition to renewable energy, has attracted considerable foreign investment, underpinning the economic momentum. However, CaixaBank cautions that growth may moderate due to normalized tourism activities and potentially reduced public consumption and immigration flows.
Despite these promising figures, economic experts emphasize challenges that could hamper sustainable and inclusive development. The Financial Times, as cited by analyst Manfred Nolte, recognized Spain as "Europe's standout economy" but warned of structural issues including a high youth unemployment rate of 26% and a structural unemployment rate of 10.3%. Per capita growth has been modest at 3.1% since 2019, signaling concerns over low-value-added employment and the need to improve productivity and social policy frameworks. The article stresses the importance of enhancing training and skills in higher-value sectors to prevent Spain from becoming a "paper tiger" and to ensure that its recent economic success is long-lasting and benefits all segments of society.
Inflation is projected to end 2023 at 2.5%, easing to an average of 2% by 2026, aligning with ECB targets. Global economic risks such as geopolitical tensions and supply chain fragility remain, while financial stability is sensitive to public finances and governance quality in major economies. Overall, Spain’s economic outlook is strong relative to some eurozone peers like Germany and France, strengthened by internal dynamics and supported by external policies.