Lorraine Williamson
Spain’s economy has once again proven its resilience. Although growth eased slightly in the third quarter of 2025, the country continues to outperform much of Europe, driven by robust domestic demand and a healthy labour market. According to the National Statistics Institute (INE), GDP rose by 0.6% between July and September, compared to 0.8% in the previous quarter. On an annual basis, growth reached 2.8%, only marginally below earlier forecasts.
The sharpest dent came from Spain’s export sector, which recorded a 4.3% drop — the steepest fall since the pandemic. Global uncertainty, coupled with sluggish growth in Germany and France and a stronger euro, made Spanish goods less competitive abroad. Even the once-booming tourism and industrial sectors felt the strain, pulling the country’s overall GDP down by 0.6%.
Domestic demand powers ahead
While exports faltered, Spaniards continued to spend. Private consumption jumped by 1.4%, with households directing more money toward hospitality, culture, and local travel. The pattern underscores a broader shift: Spain’s growth is now being fuelled largely from within.
Businesses, too, are showing optimism. Investment in capital goods rose 3.2%, with many firms upgrading technology and machinery to boost productivity. Such figures suggest that despite international headwinds, Spanish companies are still betting on the future.
A strong job market underpins confidence
Employment remains a cornerstone of the country’s economic resilience. Jobs in hospitality, healthcare, and IT continued to expand, pushing overall employment up by 0.8%. With unemployment edging down, consumer confidence has stayed high — an essential factor in maintaining domestic momentum.
Construction slows but stays vital in tourism zones
The one weak spot on the home front is the construction industry. Residential building declined slightly amid rising interest rates and tighter regulations, although activity in coastal and tourist-heavy regions remains a crucial source of local employment.
Spain still outpaces many Eurozone peers
Economists warn that growth could soften further in the final quarter as inflation, high borrowing costs, and geopolitical tensions weigh on the broader European economy. Yet Spain remains one of the Eurozone’s stronger performers — a country now less dependent on exports and more balanced in its sources of growth.
Economic resilience defines Spain’s recovery
Despite external pressures, Spain’s mix of solid job creation, business investment, and consumer confidence continues to sustain its economy. As the nation adapts to weaker export demand, its ability to rely on domestic strength shows a maturity in recovery — one that could help it weather whatever global storms lie ahead.
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