Spain's Economy Shows Growth Amid Warning Signs of Overheating and Risk

Spain has emerged as a key driver of European economic growth in 2025, with impressive job creation and GDP expansion, but experts warn of emerging risks that could threaten the sustainability of this momentum. According to recent analysis, Spain’s GDP growth is increasingly dependent on domestic demand rather than exports, with inflation at 3.1%—higher than the eurozone average of 2.1%—raising concerns about competitiveness in European markets.

The surge in employment, largely fueled by immigration, contrasts with stagnant productivity levels, which experts such as Rafael Domenech from BBVA Research highlight as a troubling sign. Domenech cautions that without productivity gains, the current growth cycle may become unsustainable. Furthermore, private sector debt has risen to 106.5% of GDP, signaling potential vulnerabilities.

Tourism remains a vital component in maintaining Spain’s external surplus; however, its low value-added nature and growing commercial deficit present risks to economic stability. Economists draw parallels with pre-2008 crisis indicators, noting the country's economy may be entering a phase of 'overheating,' which could lead to a deterioration in external accounts.

Amid these macro challenges, some sectors like retail sportswear are growing despite the broader economic caution. For example, Puma Iberia reported a more modest growth rate in Spain of 3.76% in 2024 compared to previous years but improved profitability, with revenues reaching €171.19 million and operating profit rising by nearly 15% over 2023. Footwear sales in Spain, accounting for over half of Puma's revenue, increased by 6.86%, highlighting pockets of resilience within the consumer market.

Overall, while Spain’s economy continues to grow and outperform many European peers, experts stress the importance of increasing productivity and balancing domestic and external demand to prevent future imbalances. The close monitoring of inflation, private debt levels, and reliance on tourism will be critical as Spain navigates these emerging economic challenges.