Spain's economy grows 0.7% as it continues to outshine eurozone peers
GDP jumped by 2.8% year-on-year, according to data published on Tuesday by the National Statistics Institute (INE).
In the previous quarter, yearly growth was also recorded at 2.8% and quarterly growth came in at 0.6%, allowing Spain to emerge as one of the fastest growing economies in the eurozone.
While other major European economies are grappling with structural crises and the impact of geopolitical tensions, the Spanish economy is progressing solidly.
Domestic demand has been key, contributing 0.9 percentage points to quarterly growth. Household spending continued to be the main driver, supported by an expanding labour market.
In fact, the second quarter marked a new milestone, with more than 22 million people in employment, according to the Labour Force Survey (EPA). At the same time, the unemployment rate fell to 10.29%, its lowest level since 2008, although still well above the eurozone average.
'The Spanish economy was initially projected to follow a robust growth trajectory through 2025, with a slight moderation expected in 2026. Most forecasts anticipated annual GDP growth in the range of 2.2% to 2.6% for 2025,' said professor of macroeconomics Evi Pappa, at the Universidad Carlos III in Madrid. 'However, data from the first and second quarters of 2025 indicate that Spain is surpassing these expectations,' she added.
Miguel Cardoso-Lecourtois, chief economist at BBVA Research, told Euronews that the 'engines of growth' in Spain are nonetheless changing as foreign tourism and government consumption slow. The latter is affected by political fragmentation, preventing the approval of a new budget, while domestic policies to tackle overtourism are slowing spending by non-Spanish residents.
'Growth is now more tilted towards domestic consumption and investment,' said Cardoso-Lecourtois. 'This is happening as inflation is coming down (energy prices), employment growth continues to be strong, wages continue to increase and interest rates go down. … Although government consumption is weak, public investment is relatively strong thanks to emergency funds aimed at helping flood victims in Valencia and NGEU funds.'
It also appears that the Spanish economy will escape significant direct effects from the recent trade agreement between the United States and the European Union, which includes a new 15% tariff on many EU exports to the US.
'Given Spain's small share of trade with the US and strong domestic economy, it looks well placed to continue to outperform the euro area over the coming quarters,' said Ángel Talavera, head of Europe economics at Oxford Economics.
Peter Vanden Houte, chief economist with ING, told Euronews that Tuesday's GDP figures mean Spain's 2.6% annual growth target is 'certainly achievable'. He added that interest rate cuts are also driving the construction industry in Spain, supporting growth.
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