Economic forecast for Spain - European Commission Skip to main content
An official website of the European UnionAn official EU website
Economy and Finance
  • 15 November 2024

Economic forecast for Spain

The latest macroeconomic forecast for Spain. 

Economic activity in Spain is set to expand strongly in 2024, by 3.0% before gradually decelerating in 2025, to 2.3% and to 2.1% 2026. Real GDP growth over the forecast horizon is expected to be driven by consumption, sustained by continued labour market resilience, and by the strengthening of investment, notably in 2025 and 2026. Headline inflation is projected to further decline, reaching 2.0% in 2026 as underlying price pressures moderate. The general government deficit is set to reach 3.0% of GDP in 2024, spurred by the phase-out of measures to mitigate the impact of high energy prices, before decreasing further in 2025 and broadly stabilising in 2026, thanks to decelerating primary expenditure in a context of strong tax revenues developments. The debt-to-GDP ratio is set to decline gradually in 2024-25 and then broadly stabilise in 2026 reaching 101.1% 

Indicators202420252026
GDP growth (%, yoy)3,02,32,1
Inflation (%, yoy)2,82,22,0
Unemployment (%)11,511,010,7
General government balance (% of GDP)-3,0-2,6-2,7
Gross public debt (% of GDP)102,3101,3101,1
Current account balance (% of GDP)4,24,54,4

Economic activity to remain robust 

Economic activity maintained momentum in the first half of 2024, underpinned by the strong evolution of consumption and the impetus from tourism activity. The economic expansion is set to continue in the second half of the year, as GDP expanded by 0.8% in the third quarter, upheld by robust consumption growth, despite a marginally negative contribution from net exports. 

Real GDP growth is expected at 3.0% overall this year, also reflecting a high carry-over from 2023. The positive evolution of consumer spending is set to be upheld by dynamic job creation and real income gains for households. On the external side, the buoyancy of tourism activity and the export of non-tourism services are set to underpin the positive contribution of net exports to GDP growth in 2024. Economic activity is projected to decelerate to 2.3% in 2025 and to 2.1% in 2026, albeit remaining vigorous over the forecast horizon. Domestic demand is expected to represent the key driver of the economic expansion, sustained by consumption growth and by the projected broad-based pick-up in investment. This would be attributed to the more robust implementation of the Recovery and Resilience Plan (RRP), the healthy financial position of non-financial corporations and the further easing of financing conditions. The recovery of imports growth is set to reduce the contribution of external demand to GDP growth in 2025 and 2026.  

Downside risks to the outlook include the lower-than-expected growth of Spain’s main trading partners, which could adversely impact the dynamism of activity, particularly for tourism. By contrast, a more rapid decline of the elevated households’ savings ratio towards its long term average could provide additional impetus to consumption. At the same time, persistent risk averse behaviour by the private sector could contribute holding investment back over the forecast horizon. 

Dynamic labour market and declining unemployment 

Th robust performance of the labour market extended into 2024, as the pace of job creation accelerated sharply in the first half of the year and kept some momentum in the third quarter. Employment growth is expected to expand by 2.3% in 2024, supported mainly by continued strong immigration flows. The unemployment rate is projected to decline steadily over the forecast horizon, reaching 10.7% in 2026, down from 11.5% in 2024. Nominal wage growth is set to grow above the inflation rate in 2024, with real income gains moderating in 2025 and 2026.  

Inflation to ease further over the forecast horizon 

Annual HICP inflation is projected to decline to 2.8% in 2024 driven by the continued deceleration of energy and food inflation. Underlying price pressures eased more gradually, especially in services related to hospitality and transport. Headline inflation is set to slow down in 2025, reaching 2.2%, with the downward trend of underlying components expected to continue in the coming quarters, before easing further to 2.0% in 2026. 

Government deficit decreases below 3% of GDP 

After reaching 3.5% of GDP in 2023, the general government deficit is expected to keep decreasing in 2024, to 3.0%, as most measures to mitigate the economic and social impact of high energy prices are being phased out. The revenue-to-GDP ratio is expected to rise, partly due to the withdrawal of the reductions of VAT and of the special tax on electricity, as well as the removal of the exemption from the tax on the value of electricity. The phase-out of the fuel rebate drives some savings on the expenditure side. Risks surrounding the projections are related to the extent of nationally-financed expenditure necessary to address the impact of the recent floods in the Valencian Community. 

Based on unchanged policies, the government deficit is forecast to decline further in 2025, to 2.6% of GDP, despite somewhat higher interest expenditure. This decline is driven by the slower growth of nationally-financed primary expenditure and positive developments in tax revenue, particularly from direct taxation, boosted by strong nominal GDP growth. In 2026, the general government deficit is projected to slightly increase to 2.7% of GDP as the levies on banks and energy companies are expected to expire.  

The statistical revision carried out this autumn reduced Spain’s 2023 general government debt by almost 3 pps. to 105.1% of GDP. The debt-to-GDP ratio is projected to continue narrowing in 2024 to 102.3% thanks to strong nominal GDP growth outpacing the cost of servicing debt. The ratio is set to keep decreasing more gradually in 2025-2026, to around 101.1%, due to the less favourable interest-growth rate differential.