Spain's Economy Shows Growth Amid Persistent Poverty and Economic Inequality

The Banco de España has recently raised Spain's economic growth forecasts to 2.9% for 2025 and 2.2% for 2026, signaling an accelerating economy. This uptick aligns with the government’s projections after INE revisions. However, this macroeconomic optimism contrasts sharply with the reality faced by many Spanish households, especially women, who continue to struggle with poverty and economic precarity.

Despite the GDP growth, 11.2% of Spain's active population remains at risk of poverty, ranking Spain as the third highest country in worker poverty within the European Union. Chronic poverty affects 13.6% of the population, and severe material deprivation impacted 8.6% of women in 2024, highlighting persistent structural inequalities. Women suffer disproportionately due to significant wage gaps and precarious employment conditions, with single mothers particularly vulnerable amid rising living costs.

Economist María Miyar of Funcas warns that economic growth does not necessarily translate into household welfare improvements because Spain lacks a high-productivity growth model, resulting in stagnant wages amid increasing expenses. José Carlos Díez underscores that although private consumption—the main engine of GDP growth—has risen and disposable household income is above pre-pandemic levels, inflation and escalating basic costs create financial strain and an economic malaise felt by many citizens.

Beyond household challenges, Spain’s economic environment faces structural impediments. The country ranks 31st out of 38 OECD members in economic freedom, affected by increasing state intervention, heavy taxation, and extensive regulation. This imposes barriers to business creation and employment growth. High public spending and a chronic deficit, coupled with public debt exceeding 100% of GDP, risk future tax increases. Additionally, bureaucratic hurdles and labor market rigidity further constrain economic dynamism. Analysts emphasize that this reliance on subsidies leads to economic distortions rather than sustainable growth.

Comparatively, other countries such as Ireland have improved their economic freedom through investor-friendly policies, demonstrating paths Spain might consider. Addressing these challenges requires reducing fiscal pressure, simplifying regulation, and reining in public expenditure to promote a more liberating economic climate.

Overall, Spain's promising GDP figures mask deep-rooted socioeconomic issues — especially for women — and the country’s constrained economic freedom poses risks to long-term inclusive prosperity.