CdM | S&P Global hasrevised downwards its economic forecasts for Spain and Europe as a whole in light of the impact of the war in the Middle East and the surge in energy prices. Specifically, the firm now expects Spanish GDP to grow by 1.9% in 2026, down from the previous forecast of 2.1%, against a backdrop of weaker economic momentum and greater inflationary pressure.
In its report, entitled ‘Economic Outlook Europe Q2 2026’ and published on Wednesday, it notes that the energy shock resulting from the conflict has significantly altered the macroeconomic landscape, driving up inflation and weighing on growth prospects. For the eurozone, S&P forecasts GDP growth of 1% this year, below its previous estimates, whilst inflation is set to stand at 2.4%, six-tenths of a percentage point higher than previously forecast. The agency warns that the European recovery, which at the start of the year appeared to be consolidating following the effects of the pandemic and the 2022 energy crisis, has now been ‘disrupted’ by rising oil and gas prices. This surge is directly affecting consumption by reducing household disposable income, and is putting further pressure on central banks.
Against this backdrop, S&P anticipates that the European Central Bank (ECB) will bring forward interest rate hikes, with a first increase as early as the second quarter of 2026, compared to the previous forecast which pointed to 2027. Furthermore, it does not rule out further hikes if energy prices remain under pressure.
The report also considers a more adverse scenario should the oil shock prove more intense and prolonged. In that case, inflation could exceed 5% by mid-year and trigger a technical recession in Europe, with a particularly significant impact on economies such as Spain’s, where growth could be reduced by a further half a percentage point.
Despite this environment, S&P highlights some supportive factors, such as fiscal stimulus in Germany, the dynamism of business investment and the advance of digitalisation, which continues to contribute to growth and employment in the region.
However, it stresses that the main risk remains the evolution of the conflict in the Middle East and its impact on energy prices, which will largely determine the trajectory of the European economy in the coming quarters.
