Lorraine Williamson
Spain’s economy continued to grow at the start of 2026, but the latest figures suggest momentum is beginning to slow as higher energy costs and global uncertainty weigh on households and businesses.
Preliminary data from Spain’s National Statistics Institute, the INE, shows GDP rose by 0.6% between January and March compared with the previous quarter. That was still solid growth, although two tenths lower than the final quarter of 2025. On an annual basis, the economy grew by 2.7%, slightly above the previous quarter’s 2.6%.
The figures give Spain another relatively strong reading at a time when much of Europe is struggling to build momentum. But they also point to a more cautious start to the year.
Spain still outperforms much of Europe
Spain’s first-quarter growth stands out against the wider European picture.
Eurostat’s preliminary estimate shows GDP in both the euro area and the EU rose by just 0.1% in the first quarter of 2026 compared with the previous quarter. Annual growth was 0.8% in the euro area and 1.0% across the EU.
That means Spain remains one of the stronger performers among the major European economies.
The difference matters. Spain has benefited in recent years from tourism, job creation, domestic demand, and investment linked to modernisation and EU recovery funds. However, the first quarter suggests that even Spain is not immune to pressure from higher costs and weaker international conditions.
Domestic demand keeps the economy moving
The INE figures show that domestic demand remained the main support for Spain’s economy.
Household spending rose by 0.6% in the quarter, while public spending increased by 0.2%. Investment also remained positive, although it slowed sharply, rising by 0.4% after stronger growth at the end of last year.
That slowdown in investment is important. It suggests some businesses may be taking a more careful approach while they wait to see how energy prices, financing costs and global tensions develop.
Even so, the broader picture remains one of growth rather than contraction.
Energy pressure casts a shadow
The latest data comes against the backdrop of renewed energy concerns linked to the conflict involving Iran and pressure on global oil and gas markets.
Spanish media reports have linked part of the slowdown to the energy shock, with higher fuel and production costs feeding into wider uncertainty. El País reported that Spain’s economy remained resilient in the first quarter, although the conflict in Iran and rising energy prices were already beginning to affect consumption, investment, and exports.
This matters for Spain because energy costs feed into almost every part of the economy.
They affect transport, agriculture, manufacturing, electricity bills, tourism costs, and household spending. When families expect prices to rise, they may become more cautious. Businesses may also delay investment if future costs are unclear.
Trade offers some support
Spain’s external sector also helped growth in the first quarter, although the picture is mixed.
Exports fell slightly, but imports fell by more. That meant trade made a positive contribution to quarterly growth, even though weaker imports can also point to softer domestic or business demand.
For a country heavily linked to tourism, exports, vehicle production, food, services, and logistics, this is a sign to watch closely.
If international demand weakens further, Spain could face more pressure later in the year. If tourism remains strong and domestic spending holds up, the economy may remain more resilient than its neighbours.
Most sectors continue to expand
The early 2026 figures show growth across most parts of the economy.
Services expanded by 0.7% in the quarter, reflecting the continued strength of a sector that includes tourism, hospitality, retail, transport, and professional services. Industry grew by 0.4%, while construction increased by 0.1%. Agriculture recorded quarterly growth of 3.3%, helped by better conditions after a difficult period.
The annual picture is more uneven.
Construction shows the strongest year-on-year growth, followed by services and industry. Agriculture remains vulnerable, despite its quarterly improvement.
That vulnerability will be familiar to many parts of rural Spain, where drought, water pressure, input costs, and climate uncertainty continue to affect farmers.
A stronger Spain, but not a risk-free one
The government is likely to point to the figures as evidence that Spain is holding up well.
There is a good case for that. Growth remains positive, household spending is still rising, and Spain continues to perform better than the eurozone average.
But the warning signs should not be ignored.
Quarterly growth has slowed. Investment has lost pace. Energy costs remain unpredictable. Families are still sensitive to food, fuel, and mortgage costs. Businesses face the same problem in a different form: higher operating costs and uncertainty over future demand.
Why these figures matter to everyday life
GDP figures can feel distant, but they shape daily life in practical ways.
A growing economy tends to support employment, public revenue, and business confidence. It can help maintain consumer spending and reduce pressure on public finances.
But if growth slows too much, the effects can appear gradually: fewer new jobs, weaker wage rises, tighter household budgets, and more caution from businesses.
For now, Spain is not in that position. The economy is still growing and still outperforming much of Europe.
The question is whether that resilience can continue if energy prices remain high and the wider European economy stays weak.
Spain enters the spring in a stronger position than many neighbours
Spain begins the second quarter of 2026 with a useful advantage: growth remains solid, demand at home is still supporting activity, and the country is performing better than the eurozone average.
But the first-quarter figures also mark a shift in tone.
The Spanish economy is still moving forward, but less freely than before. Energy pressure, geopolitical uncertainty, and slower investment now sit behind the headline growth figure.
That does not make the outlook negative. It does make it more fragile.