Bankinter | The Bank of Spain has updated its forecasts for the Spanish economy, raising GDP growth for this year and the next two years: 2025 will close with an increase of 2.9% (up 0.3%), 2026 with 2.2% (0.4%) and 2027 with 1.9% (0.2%). The improvement in growth projections is based on a review of recent quarterly activity and domestic demand, particularly the dynamism of private consumption.
With regard to inflation, 2.7% (up 0.2%) in 2025; 2.1% (0.4%) in 2026 and 1.9% (0.5%) in 2027. The upward revision for 2025 is due to the recent upturn and the upward revision of activity. The downward revision for 2027 is due to the delay until 2028 in the entry into force of the new EU emissions trading system, which leads to a forecast of lower energy prices. Core inflation is projected to be 2.6% in 2025, 2.5% in 2026 and 2.1% in 2027.
The unemployment rate is projected to be 10.6% in 2025, 10% in 2026 and 9.6% in 2027. With regard to the general government deficit, they point to a drop of 2.5% in 2025 (unchanged); a further 2.1% (down 0.2pp) in 2026 and another 2.5% (0.2pp higher) in 2027. Finally, risks to activity remain balanced in the short term and slightly on the downside in the medium term (particularly internal risks linked to inflation, wages and housing), while risks to inflation are on the upside throughout the projection horizon.
Analysis team’s view: The upward revision highlights the strength of domestic demand. Our estimates also point to growth based on private consumption and investment (2.9% in 2025; 2.0% in 2026 and 1.7% in 2027.
