The Spanish economy’s growth cycle: Constraints and outlook through 2027
Spanish economy
Fecha: noviembre 2025
Raymond Torres, María Jesús Fernández and Fernando Gómez Díaz
SEFO, Spanish and International Economic & Financial Outlook, V. 14 N.º6 (November 2025)
Spain remains Europe’s leading growth engine, with GDP now 10% above its pre-pandemic level and expanding at nearly twice the eurozone average; all without generating macroeconomic imbalances. However, the current cycle, resilient through successive global shocks, is now driven almost entirely by domestic demand, supported by household consumption and a buoyant labour market. Foreign-born workers have accounted for 65% of net new jobs over the past three years, yet their integration is increasingly constrained by acute housing shortages. Private investment also remains subdued, still 5% below prepandemic levels in real terms, weighing on productivity. Meanwhile, European funds, which have fuelled public investment, are expected to taper off as the Next Generation programme approaches its end. Under this scenario, Funcas projects GDP growth of 2.9% in 2025, moderating to 1.9% in 2026 and 1.7% in 2027, underscoring the need to boost residential construction and corporate investment to sustain long-term growth momentum.