Official forecasts from Brussels put Spain’s GDP growth at 2.4% this year and 1.9% next year, while S&P Global Ratings and the OECD expect growth of between 2.3% and 2.6% in 2026, still above the eurozone average. But growth is slowing, and analyst Marc Vidal says its drivers are changing.
Vidal discussed the outlook on Herrera en COPE. Spain is outpacing most of Europe, but its growth is losing speed. BBVA Research data shows strong domestic demand accounted for most of the 0.7% GDP rise in the last quarter, making household spending the economy’s basic engine.
Population growth is another factor. Vidal says more people are working because more people are arriving, with the labor force swelling faster than jobs are being created. So, growth is spread across more people. Vidal put it simply: “The cake is bigger because more people are sitting at the table.” But the average slice, GDP per person, has stopped growing as quickly. Forecasts from BBVA Research and the OECD, echoed by S&P, point to much weaker per capita gains than overall growth suggests. Nominal figures are up, while real household gains lag behind.
Inflation is set to hit 3% this year, pushing up the economy’s nominal size and taking headline growth above 5%. S&P Global Ratings forecasts inflation of 3.2% in Spain in 2026, above the eurozone average and directly affecting real household incomes. Carlos Herrera pointed out that Spain’s tax authority is collecting revenue four times faster than the real economy is growing. VAT and personal income tax receipts have jumped about 10%. The deficit is shrinking, but not because of tax hikes. The European Central Bank expects eurozone inflation to average 3.0% in 2026. Inflation is not unique to Spain, but it is biting harder there.
Public finances look better on paper. Vidal says the decline in debt to below 100% of GDP does not reflect repayment of what is owed; it stems from higher nominal GDP, driven by rising prices. AIReF projects that Spain will end 2026 with public debt at approximately 99.9% of GDP. The drop below the 100% threshold largely reflects nominal GDP growth, not a real reduction in debt. The real debt burden has not budged.
Some figures are positive. Unemployment is below 10% for the first time since 2008. European funds continue to flow in, while the deficit has remained at 2.4% for two years. But Vidal calls these supports fragile. He warns that Spain relies too heavily on population growth and inflation-fueled tax revenue. Tourism and European money also underpin the model. If any of these weaken, risks could emerge quickly. The ECB’s latest bulletin describes a difficult fiscal outlook for the eurozone, projecting a 3.6% budget deficit and rising debt in 2026. Spain is not alone in this struggle.
