Spain’s Economy Surges in 2025 with Robust Growth and Shifting Productivity Dynamics
Spain's economy marked a strong rebound in 2025 with 2.8% GDP growth and significant job creation, despite persistent challenges in capital productivity.
- • Spain’s GDP grew by 2.8% in 2025, exceeding forecasts.
- • Employment surged across industry, agro-food, hospitality, and logistics sectors.
- • Labor productivity rose 18% by end of 2024, while capital productivity fell 23%.
- • Government incentives and structural reforms support continued economic growth.
Key details
Spain experienced a remarkable economic upturn in 2025, with GDP growth reaching 2.8%, surpassing expectations and marking its best performance since 2017. This growth was accompanied by a notable decline in unemployment to 11.3% and inflation easing to 2.1%, according to economic analysts. Key sectors driving this positive momentum include tourism, renewable energy, technology, industry, agro-food, hospitality, and logistics, all contributing significantly to job creation and economic vitality.
Employment saw robust growth, bolstered by sectors like industry which created 125,000 jobs over the past year, particularly in the Basque Country, Madrid, and Catalonia. Agro-food added 40,100 jobs, focusing on quality consumption products, while hospitality grew by 68,000 positions driven by strong domestic consumption and tourism recovery. The logistics sector, which employs over 1.26 million people, also expanded with 26,000 new jobs, stimulated by the rise of e-commerce.
However, while labor productivity has surged by 18% by the end of 2024, capital productivity remains a challenge, falling 23% below historical levels. This disparity stems from lingering effects of over-investment during the pre-2008 real estate boom. Despite a 6.3% investment rise in 2025, mainly driven by public sector projects, capital productivity has yet to fully rebound. Meanwhile, labor efficiency improvements are attributed to better access to technology and capital, with the average company size increasing by 19.3% between 2018 and 2025.
The government’s introduction of fiscal incentives, temporary tax reliefs, and flexible credit lines has supported this growth, enhancing consumer confidence and encouraging entrepreneurship. Structural reforms and European funds have underpinned modernization efforts, fostering a greener, more inclusive economy.
Looking ahead, experts anticipate continued strong economic performance, with the Bank of Spain forecasting growth potentially rising to 3% by year-end, contingent on sustained consumption and investment trends. The upcoming Productivity Council report is expected to propose strategies aimed at resolving longstanding capital productivity issues, emphasizing a shift towards higher value-added sectors to sustain Spain’s economic modernization.
This article was translated and synthesized from Spanish sources, providing English-speaking readers with local perspectives.
Source articles (3)
Source comparison
Unemployment rate
Sources report different unemployment rates for 2025.
secom.es
"the unemployment rate decreased to 11.3%."
eldiario.es
"(no mention of unemployment rate)"
Why this matters: One source states the unemployment rate decreased to 11.3%, while another source does not mention the unemployment rate at all. This discrepancy is significant as it affects understanding of the labor market's health during economic growth.