From inflation to Trump's tariffs: the Spanish economy's problems change

MadridThe Spanish economy has changed its face, or at least that's how it's interpreted at Esade Business School. Inflation was until recently the main specter of Spain's growth prospects, but the ongoing trade war with the United States and its derivatives, such as global uncertainty and international financial instability, has displaced it.

Thus, while the impact of the Donald Trump administration's tariff policy may lead to a "moderation" in the economy's growth rate in 2025, the rise in prices that began in 2021 "is no longer one of the main problems" after the decline recorded in recent months, as stated by Manuel, during the presentation of the business school's Economic and Financial Report for the second half of the year.

During the presentation of the report on Tuesday, the researcher noted that inflation in the country is now at levels close to 2%, which is the target of the European Central Bank (ECB). In fact, the National Institute of Statistics confirmed this Tuesday that prices rose 2.3% in June compared to the same month in 2024, while core inflation (the rate that does not take into account food and energy products) stands at 2.2%. "It's a very clear moderation [in food prices]," reiterated Hidalgo, who also highlighted the decline in energy prices, Despite recent tensions over oil due to the war in the Middle East, which in the Spanish case goes hand in hand with the rise of renewables.

On the other hand, the decisions that the White House may ultimately make in terms of tariff policy and the response being considered by the European Commission have motivated the latest downward revisions to the growth outlook. Although Spain is more protected compared to other economies with greater trade ties with the US, Esade warns of the impact of tariffs on some specific sectors (olive oil, motors, and ceramics) and autonomous communities where these activities have greater weight.

The report also warns that, beyond temporary factors such as the trade war with the United States, "structural imbalances persist that may limit sustained growth of the Spanish economy." In this regard, Esade highlights the difficulties in accessing housing and the productivity levels of the economy.

Robust growth in the next five years

However, Esade forecasts that the Spanish economy will grow by between 0.5% and 0.7% in the second quarter of the year (April, May, and June). "The short- and medium-term outlook remains positive," the report concludes. In fact, in 2025, Spanish GDP is expected to grow between 2.4% and 2.6%, depending on the international organization's forecast. These forecasts, combined with those for 2026, "confirm the continuation of the Spanish economy's expansionary cycle, despite the gradual moderation in the growth rate," Esade reiterates. "Looking at a broader horizon, sustained growth [of the Spanish economy] of 8% is expected for the next five years."

According to the report, this positive performance of the Spanish macroeconomy is explained by several reasons. The first is the dynamism of the labor market. "Traditionally, the labor market has been a vulnerable point, but its [current] performance is surprising, with job creation remaining dynamic above expectations and an unemployment rate approaching historic lows."

Added to this is the population growth, especially due to the arrival of immigrants. At a time when Torre Pacheco (Murcia) is trying to return to normality after the Racist incidents against residents of North African origin and businesses owned by themThe report notes that the immigrant population has been "a key factor supporting economic growth" and indicates that "not all migrants are now in low-skilled jobs." It also recommends that "to maximize its benefits, appropriate social and labor integration policies are necessary."

Finally, Esade also points to exports of goods and services (tourism), the financial situation of households with a significant savings base and controlled debt, public investment associated with the European Next Generation funds, and the improvement in financial conditions with lower interest rates as contributing factors.