New scenario for the Spanish economy: dynamism in a fragile environment

The economy is starting from a better position than expected

The Spanish economy has performed better than expected in the first half of 2025. GDP grew 0.6% in Q1 and accelerated to 0.8% in Q2, exceeding the initial forecasts of 0.5%. In addition, growth has been balanced and healthy, driven by both investment and private consumption. This good performance becomes even more noteworthy if we consider the international context, marked by increased trade tensions with the US and the associated uncertainty.

The initial data for Q3 indicate that economic activity is progressing at a steady pace. Although job growth is slightly more moderate than in the previous quarter, it remains significant, with a quarter-on-quarter increase of 0.4% in July and August. The composite PMI has improved significantly and the tourism season has gone somewhat better than expected.1 The only less positive note comes from the CaixaBank Research Consumption Tracker, which shows a slowdown in year-on-year consumption growth: 2.7% with data up until the third week of September, compared to 4.3% in Q2. Despite this, the overall reading of the indicators is positive and a quarter-on-quarter growth rate of 0.6% is expected in Q3, 0.1 pp more than previously estimated.

Key points of the new scenario

All the indicators suggest that the Spanish economy will maintain a dynamic growth rate in the coming quarters, supported by the ECB’s interest rate cuts, moderate energy prices and the continuation of relatively high immigration flows. In this context, private consumption and investment are likely to consolidate their role as the engines of growth.

Regarding the ECB, inflation in the euro area has already reached the 2% target and no major fluctuations are anticipated in the near future, so rates look set to remain at around 2%, well below the levels of recent years. The market is only contemplating the possibility of one final rate cut, which would place the depo rate at 1.75% in 2026, before returning to 2% in 2027. Alternatively, the ECB could keep the depo rate at 2% for the remainder of 2025 and throughout 2026. In any case, Spain’s economy will continue to benefit from the cycle of rate cuts for the remainder of this year and in 2026.

Secondly, forecasts for the oil price point to a slight decline in the remaining months of the year: after hovering around 68 dollars/barrel in September, Brent is expected to fall to 65 dollars/barrel in December 2025 and to remain around that level during 2026. Based on this scenario, the oil price will consolidate at lower levels than those recorded in recent years, which will continue to drive growth.

As for international markets, the forecast growth of the world economy in 2025 has been revised slightly upwards, from 2.9% to 3.1%, while that of the euro area for 2025 and 2026 has also been revised 0.1 pp upwards, to 1.3% and 1.2%, respectively. This improvement is mainly the result of better-than-expected growth data for Q1 and Q2. Nevertheless, the growth of our main trading partner remains modest, suggesting that the increase in Spanish exports will be limited.