The Spanish economy maintains growth above the European average

BarcelonaThe Spanish economy maintained a growth rate well above the European average in the second quarter, in line with the past two years. The economy's good performance is primarily due to the strength of domestic demand, especially household consumption and investment, while the foreign sector has suffered a downturn due to the unfavorable international context caused by the US trade war and the conflicts in Ukraine and the Middle East.

Thus, the gross domestic product (GDP, the indicator that measures the size of an economy) grew between April and June of this year by 2.8% compared to the same period in 2025 (the same figure than the first quarter), according to data released Tuesday by the National Statistics Institute (INE). Compared to the previous quarter, growth was 0.7%, one-tenth higher than the quarterly rate recorded in the first quarter.

Spain's growth rate remains above the European average, following the trend of the last two years, in which it has been the European Union member state that has contributed the most to the bloc's growth. While the data for the entire European Union and the eurozone for the second quarter are still pending, Spanish GDP remains similar to those of 2023 and 2024, when the Spanish economy began to grow at a much higher rate than the European economy, which was in a slump.

In the first quarter, activity in the eurozone rose by 1.5% annually, while Spain remained close to 3%. European growth is suffering from the fact that Germany, the continent's largest economy, accumulates two years of recession since the inflationary crisis caused by the Russian invasion of Ukraine and, later, by the trade war initiated by US President Donald Trump.

Spanish Economy Minister Carlos Cuerpo described the data as "good news" and highlighted "the enormous job creation" in recent months as one of the causes of the economic expansion. He also referred to the improvement in productivity. "The Spanish economy maintains its dynamism," the minister added in a recorded statement for the media.

By sector, services—as is typical in spring months when tourism and cultural and leisure activities are reactivated—and construction were the main drivers of growth, with quarterly increases in activity of 1.2% and 1.5%, respectively. In contrast, the primary sector experienced a significant decline of 9.5% compared to the first three months of the year.

As for industry, it grew by 0.8% as a whole, although the manufacturing sector grew at a faster pace, at 1.1% quarterly. Manufacturing growth is particularly noteworthy in a very unfavorable context for goods exports, marked by the uncertainty caused by the tariff policy of US President Donald Trump.

Despite the poor international outlook, exports grew by 1.1% compared to the first quarter, placing them 3.3% above the levels of a year earlier. However, imports grew even more—1.7% quarterly and 5.6% annually—thus further widening Spain's foreign trade deficit. Rising energy prices (Spain, like Europe as a whole, is a net importer) would explain part of the increase in imports.

Domestic demand, the only factor of growth

This explains why the growth recorded this quarter in Spain is due solely to domestic activity. Of the 0.7 percentage point increase in state GDP in one quarter, domestic economic activity contributed 0.9, but the foreign sector subtracted almost 0.2. Similarly, looking at the year-on-year rate of 2.8%, foreign demand had a negative contribution of 0.6 points, while domestic demand contributed 3.4 points.

From a demand perspective, investment and household consumption have been the two pillars of growth for another quarter. In one quarter, both variables expanded by 2.1% and 0.8%, respectively, while annually they grew by 5.3% and 3.5%, respectively. In contrast, public spending fell slightly by 0.1% compared to the first quarter, despite remaining 1.8% above the levels of the second quarter of last year.

The traction provided by household consumption is consistent with the positive employment data in the Spanish labor market, with a drop in unemployment. The fact that more people have jobs, along with the increases in the minimum wage in recent years and the moderation in prices since last year, have given households more room to consume.

The data published this Tuesday are a first preview. The INE (National Institute of Statistics and Census) will release the final and more detailed GDP figures on September 26. Before that, this Thursday, Idescat (National Institute of Statistics and Census) will publish a first preview of Catalan GDP, also for the second quarter.