Spain's Economy to Grow in 2026 Despite Slowing Job Creation, Government Reports
Spain's GDP is expected to grow 2.2% in 2026, supported by past momentum but hindered by a nearly 30% slowdown in job growth, with government reports highlighting economic and social progress alongside challenges.
- • Spain's GDP projected to grow 2.2% in 2026 due to previous years' momentum.
- • Net employment creation expected to decrease nearly 30%, with job growth dropping from over 500,000 to 350,000 new jobs.
- • Economic growth supported by domestic consumption, tourism, and increased construction investment.
- • Government highlights reductions in inequality and poverty, forecasting average 2% GDP growth over next five years.
Key details
Spain's economy is projected to grow by 2.2% in 2026, driven largely by momentum from prior years, according to an economic report presented to the Council of Ministers. This growth follows an estimated 1.1% increase in GDP in 2024 and a projected 2.9% increase this year. However, the expansion is accompanied by a significant slowdown in employment creation, which is expected to decline nearly 30%, from over 500,000 new jobs this year to approximately 350,000 in 2026. The net employment growth rate is anticipated to drop from 2.8% in 2025 to 2.1% in 2026 and further to 1.9% in subsequent years.
The government attributes the current economic momentum to robust domestic consumption, tourism, and a 5% increase in construction investment. Yet, it forecasts a decrease in investment in capital goods for 2026 and 2027. The economic improvements have been bolstered by the Next Generation EU funds, although over €20 billion in subsidies are still pending disbursement.
In an update to its economic forecasts, the government has included new indicators on inequality and poverty, emphasizing that inequality has decreased by 40 points since 2018 and that the country now has the lowest poverty rate since 2017. Officials remain optimistic, forecasting an average GDP growth of 2% over the next five years, above the eurozone average.
In addition to these forecasts, a recent discussion among economists on 'La Brújula de la Economía' analyzed Spain's macroeconomic framework and government spending policies, highlighting the challenges and opportunities the economy faces as it navigates these transitions.
Overall, while Spain's GDP growth outlook remains positive for 2026, the marked slowdown in job creation raises concerns about the labor market's capacity to sustain economic growth at previous levels.
This article was synthesized and translated from native language sources to provide English-speaking readers with local perspectives.