The Spanish government expresses economic optimism despite the war in Iran

MadridEconomic optimism despite the war in Iran. The Spanish government has updated the macroeconomic framework this Monday and forecasts that the economy will grow by 2.6% in 2026, and will continue to grow above 2% in the next three years, that is, until 2029, as announced by Cadena SER and confirmed by sources from the Ministry of Economy. The First Vice-President and Minister of Economy, Carlos Cuerpo, will appear at a press conference this Monday after the Council of Ministers to detail the specifics of this update. He will also explain which measures of the economic shock plan for the war in Iran will remain in force from now on – the Council of Ministers is being held this Monday and not tomorrow, Tuesday, because the current decree with the measures expires precisely on June 30th. this June 30th.

The update of the macroeconomic framework is an essential step for the preparation of the General State Budgets for 2027, which Pedro Sánchez has committed to present despite the current fragility of the legislature. "When we have more certainty about the impact of the war, we will update the [macroeconomic] scenario for the budgets," the minister indicated at the end of April, while calling for "prudence." Until now, the Spanish government had forecast that gross domestic product (GDP, the indicator that measures economic activity) would grow by 2.2% in 2026.

The decision to revise economic growth upwards clashes with what the same Spanish executive indicated at the beginning of the conflict: a downward revision of between one and eight tenths. However, it is in line with what organizations such as the Independent Fiscal Authority (Airef) have done, which last week also revised upwards the growth of the Spanish economy for 2026: to 2.4%. The Bank of Spain maintains growth at 2.3%, while the International Monetary Fund (IMF) is more cautious and places it at 2.1%.

It should be taken into account that 2.6% growth for 2026 means tripling the growth forecast for the economy in the euro area, which the European Commission places at 0.9%. Already last year, Spain positioned itself as one of the most robust advanced economies (the Spanish economy grew by 2.8%), thanks to private consumption, investment, and the dynamism of the labor market.

Despite the impact of the war, particularly on energy prices, the Spanish government maintains that the package of measures approved three months ago has allowed it to "cushion" the blow to inflation and families' purchasing power. Sources from the Ministry of Economy calculate that the measures have helped contain the inflation rate to some extent. Nevertheless, the cost of living in Spain remains high this June: the CPI stands at 3.2% above the levels of the same month last year, the same annual variation as that recorded in May.

However, it is this "stability" in prices over the last two months that has served, among other things, as a basis for revising the macroeconomic framework. At the same time, progress, albeit small and fragile, has been made towards a possible peace agreement between the United States and Iran and the maintenance of a ceasefire that helps restore normality in the Strait of Hormuz.