Spain's Economy Shows Strong Growth and Job Creation in 2025 with Positive Outlook for 2026

Spain experienced significant economic growth in 2025, outpacing much of the Eurozone with a 2.8% expansion, according to reports. This growth was accompanied by over half a million new jobs created during the year, marking a robust labor market rebound. The construction sector stood out, doubling its employment relative to 2024, linked to a resurgence in housing construction amid a severe shortage of 700,000 homes nationwide.

Madrid was the most dynamic region in terms of job creation, adding 108,000 positions and achieving a 3% employment growth rate, overtaking Catalonia in social security contributors. Immigrants played a key role in the job market, accounting for 200,000 of the new jobs created in 2025. Overall, social security contributors reached a record 21.8 million, with unemployment falling by 6%, down to just over 2.4 million people.

Despite the robust growth, public sentiment remains cautious, largely due to rising housing costs which surged by 13% in 2025, coupled with stagnant wages that have failed to keep pace with inflation triggered by the pandemic and the Ukraine war. The minimum wage increases have helped the lower-income segment, but average wage growth remains sluggish.

The Bank of Spain projects continued economic expansion for 2026, forecasting the creation of between 400,000 and 500,000 new jobs if the current trends persist. Private consumption is expected to benefit from anticipated wage increases above 4%, while exports of non-tourism services continue to thrive, growing at three times the European average rate of 15% annually.

Despite optimistic indicators including a nearly 50% rise in the stock market and improved credit ratings, risks remain from global geopolitical tensions, especially related to U.S. actions that may affect international markets. The Bank of Spain also cautions against expansive public spending to control public debt, which could increase by 2027.

While the structural reforms and economic diversification have strengthened Spain’s economy compared to the pre-2008 period, experts agree that reforms in taxation, housing, and regional financing are necessary to secure sustainable growth and address public concerns. The current trajectory, however, suggests Spain is entering 2026 as the fastest-growing major economy in the Eurozone, showing resilience and encouraging labor market dynamics.