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Spanish economic growth and inflation outlook

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2026-10-14 18:02 UTC → 2026-10-17 18:49 UTC · added ~~removed~~

The Bank of Spain has revised its economic growth forecasts upward for 2026 and 2027, projecting GDP growth of 2.6% and 2.2% respectively. Despite this growth, the bank has worsened its inflation projections, raising forecasts to 3.9% for 2026 and 3.7% for 2027, noting that inflation in Spain has become “more pronounced than in the broader Eurozone.” Under the leadership of José Luis Escrivá, the central bank attributed these upward inflation revisions to rising energy costs—linked to volatility from Middle East tensions—and service sector inflation, including tourism, hotels, and restaurants. Core inflation is expected to reach 3.4% in 2026 and 3.5% in 2027. The bank also warned of risks such as a growing housing deficit that could reach one million units by 2028, and the potential for higher interest rates to dampen household consumption. Complementing these views, the International Monetary Fund (IMF) has raised its growth forecast for Spain to 2.5% for 2026, an increase of four-tenths from previous estimates, while maintaining a 1.8% projection for 2027. This positions Spain as a leading economy among advanced nations, significantly outpacing the projected 1.1% growth for the broader Eurozone and outperforming major peers such as Germany (1.3%), France (0.4%), and Italy (0.8%). Regarding inflation, the IMF anticipates Spanish prices will average 3.7% in 2026 before moderating to 2.7% in 2027. Domestic business activity remains strong, with August recording 7,526 new company formations, the highest for that month since 2007. However, company dissolutions also rose by 2.8% to 1,315 during the same period. Regional trends show significant variation: new company creation rose by 34.5% in Murcia and 15.7% in the Canary Islands, while Catalonia experienced a 1.1% decline in new business formations. Recent data from the National Statistics Institute (INE) indicates that inflation rose to 4.9% year-on-year in September, up from August.

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