The Bank of Spain ends the year with an upward revision of growth forecasts for 2025 and 2026

Barcelona / MadridAnalysts at the Bank of Spain are heading into their Christmas break with a positive outlook regarding economic growth in the country. In line with other international organizations, and also with the Spanish government, the supervisory body forecasts that the Spanish economy will grow more than previously expected in 2025 (2.9%), as well as in 2026 and 2027. And they expect strong growth. Specifically, they estimate a rebound in gross domestic product (GDP, the indicator used to measure the size of an economy) of 2.2% next year, while in 2027 they project 1.9%, as detailed in the macroeconomic projections published this Tuesday. These figures represent upward revisions of four and two tenths of a percentage point, respectively, compared to the September projections.

Following the optimism generated by the data published this Tuesday, particularly the 2026 figures, there is a tailwind effect from 2025: as the Spanish economy will close the year better than expected, this will be noticeable at the start of the coming year. In fact, looking ahead to the fourth quarter (October, November, and December), the Bank of Spain forecasts robust GDP growth of between 0.6% and 0.7%.

As for 2025, the improved GDP figures have been supported by the revision of national accounts data—the INE data—for the last few months; also by increased dynamism in private household consumption, which is explained by the strong performance of the labor market and easier access to credit resulting from the relaxation of financial conditions. Finally, a more positive performance in non-tourism service exports (e.g., consulting services) has been a contributing factor, contrasting with the weak performance of goods exports in recent months, coinciding with the implementation of Donald Trump's tariffs.

Growth of 0.6% in the third quarter

In fact, exports have been the Achilles' heel of the Spanish economy in the third quarter of the year, as the National Statistics Institute (INE) confirmed this Tuesday. The statistical agency has confirmed that Spain's GDP grew by 0.6% between July and SeptemberHowever, this upward trend in the economy slowed by one-tenth of a percentage point compared to the second quarter, when the increase was 0.7%. The external sector was one of the factors that held back growth. Household consumption, on the other hand, continues to be the driving force, as highlighted by the Ministry of Economy. This element registered a 1.1% increase in the third quarter, accelerating the pace compared to the previous period. The department led by Carlos Cuerpo also emphasized the solid progress in investment, which increased by 2.1%, and proudly noted that this dynamism occurred despite an international context of geopolitical and trade uncertainty. In the opinion of the Spanish government, these figures reinforce its forecasts of GDP growth of 2.9% or higher in 2025, with Spain outperforming its main EU partners. Upward pressure on prices

However, the behavior of macroeconomic growth contrasts with the behavior of prices. The Bank of Spain has revised its inflation forecasts upwards for this year, as well as for 2026, while lowering them for 2027. Thus, according to the Bank of Spain, the average inflation rate (price growth) in 2025 will be 2.7% compared to the previous year, and 2.1% compared to the September projections. The Bank of Spain links the price increase this year and next to the rise in wage income resulting from collective bargaining, but also to greater pressure from core inflation (which excludes more volatile items such as fresh food and energy), as well as energy prices. Likewise, economic dynamism and the boost from private consumption, as well as tourism, are also contributing to rising prices.