Else Beekman
At a time when global economic outlooks are under pressure due to increasing trade barriers and political tensions, Spain remains a positive exception. Recent forecasts from the Organisation for Economic Co-operation and Development (OECD) predict a 2.6% growth for the Spanish economy in 2025. This distinguishes the country from other major economies, such as Germany or the eurozone as a whole.
The OECD has downgraded its global growth forecasts for 2025 from 3.3% to 3.1%. This reduction is primarily based on escalating trade tensions, particularly between the United States, Canada, and Mexico. These tensions have led to increased tariffs and uncertainty in international markets, hampering economic activity.
Impact of trade barriers on the US
The United States is also experiencing the negative effects of increased tariffs. The OECD predicts a significant slowdown in the American economy, which will lose the momentum gained during the Biden era. While the US achieved a growth rate of 2.8% in 2024, this is expected to decline to 2.2% in 2025 and further drop to 1.6% in 2026. This represents a downward revision of 0.2 and 0.5 percentage points, respectively, compared to previous OECD projections. And that is without yet considering the potential impact of additional tariffs on European goods.
Impact on Canada
In addition to the US, Canada is also facing a sharp economic slowdown, although the country is expected to avoid a recession for now. The OECD forecasts modest growth of 0.7% in both 2025 and 2026, which marks a downward revision of 1.3 percentage points per year compared to previous estimates.
Spanish Bank’s perspective on Spain’s growth
Not only the OECD but also the Spanish Bank has revised its growth forecasts for Spain upwards. According to the institution, Spain is in a favourable economic cycle, making it one of the fastest-growing economies in the EU. While Germany stagnates at 0.3% growth and the eurozone records just 1.1%, the Spanish Bank predicts Spain will grow by 2.7% in 2025.
Strong labour market behind growth
One of the key drivers behind this growth, according to the Spanish Bank, is the strong labour market. Unemployment had long been a major weak spot in the Spanish economy, but employment is now the primary force driving growth. The increase in job opportunities, higher wages, and improved disposable household income are stimulating domestic demand, particularly consumption.
According to the Spanish Bank’s report, the number of jobs in 2025 is expected to rise by 1.9%, while productivity per worker will increase by 0.8%. This combination not only helps reduce unemployment but also contributes to a more balanced economic model, where growth is based on sustainable and solid foundations.
Improved purchasing power
Additionally, figures indicate that wages rose by 5.4% in 2024. This resulted in a 2.6% improvement in purchasing power, adjusted for inflation. As a result, households can spend more, which in turn encourages businesses to invest and hire more employees. This creates a self-reinforcing cycle in which employment and consumption further drive economic growth.
Also read: Spanish economy surges ahead as Central Bank revises growth forecasts upwards