Driven by robust private investment, surging tourism, progressive fiscal adjustment and a resilient labour market the Spanish economy continues to outpace the European average. In this PERSPECTIVES Special – Spain: Impressive economic growth, once again, we explore the reasons for this success, while also addressing the structural challenges that Spain faces, which include productivity gaps, housing shortages, and political uncertainty. Dive into sector highlights, market implications, and what the future holds for the Spanish economy as it strives to maintain its top-performer status in the Eurozone.
Key takeaways
- The Spanish economy will close 2025 again with impressive growth, well above the European average. Forecasts point to somewhat lower growth in 2026, driven by consumption and private investment (including real estate).
- Strong growth is allowing progressive fiscal adjustment, with a deficit/GDP ratio that, according to the Bank of Spain, will be below 3% and a debt/GDP level of 100%.
- Spanish assets have reflected this good economic tone with strong performance. In fixed income, the Spanish risk premium (the difference between the yield on the Spanish 10-year bond and the German Bund of the same term) has fallen to levels of 50 basis points (bps) below the French premium (currently around 77bps). As regards equity income, the Ibex 35 has far exceeded the revaluations of its European counterparts, rising to record highs, largely thanks to the high weight of banking stocks.
