Spain Clings to 2.6% Growth Forecast for 2025 — Betting on Shoppers to Outpace Tariffs
Spain, improbably, is keeping its optimism intact.
Despite a global tariff war that’s turning trade maps into battle plans, Madrid has reaffirmed its GDP growth forecast of 2.6% for 2025.
How? By leaning on something oddly simple: its own people. While other European economies stumble under rising protectionism, Spain’s bet is that domestic consumption—fueled by jobs, wages, and a healthy appetite for spending—can keep the economy humming even as exports hit headwinds.
Tariff Wars: The World’s New Background Noise
The global economy is now living under the steady drumbeat of trade skirmishes. The U.S. and China remain locked in their familiar tit-for-tat, and the EU has been pulled in—slapping and receiving tariffs in a dance no one seems able to stop.
Spain isn’t a primary target, but it hasn’t escaped the shrapnel. Exports of cars, machinery, and agricultural goods are all feeling the pinch—higher costs, tougher access, thinner margins.
The result: Spain’s export growth has slowed. But the government’s forecast remains unmoved.
The Quiet Hero: Spanish Consumers
The real story isn’t the tariffs—it’s the shoppers.
Domestic consumption is the engine keeping Spain’s GDP projections alive. Four big reasons:
- Jobs are back: Unemployment—once the country’s economic scar—is projected to dip below 10% for the first time since 2008. Tech, renewable energy, and services are creating jobs and confidence.
- Wages are rising: Up 3.2% in 2024 and climbing, putting more cash in wallets. Spaniards are spending it—on homes, on leisure, on the little luxuries that ripple through an economy.
- Tourism rebounds: International arrivals are recovering, and Spaniards themselves are traveling more, fueling local demand. Tourism may not count entirely as “domestic consumption,” but it behaves like it.
- Low household debt: Unlike some neighbors, Spanish households aren’t maxed out. They’re able to borrow—and they are, for everything from kitchen renovations to new cars.
Fiscal Cushioning Without Fiscal Chaos
Madrid hasn’t just left this to chance. The government has mixed targeted subsidies, tax credits, and incentives to keep purchasing power strong.
In 2024, for example, tax breaks for small businesses investing in green tech and digital upgrades helped shield some industries from tariff-driven cost spikes.
And while Spain’s debt-to-GDP ratio sits at 108%, that’s down from its pandemic peak of 125%. Compared to some EU peers, Spain’s fiscal stance now looks positively tidy.
ECB: Less Heat, More Breathing Room
The European Central Bank has eased its grip. Inflation is cooling, rates have stopped climbing like they did in 2022–23, and Spanish borrowers are breathing easier.
Mortgages are stabilizing. Consumer credit is ticking up. In short: people aren’t scared to spend.
Storm Clouds on the Horizon
This optimism isn’t bulletproof. A worsening tariff war could:
- Choke off foreign investment.
- Snarl supply chains in key sectors.
- Push up import prices for raw materials.
And while domestic consumption is carrying Spain for now, it cannot indefinitely offset a deep export slump.
A Model in the Making?
Still, analysts are intrigued. The IMF and the European Commission have both praised Spain’s mix of fiscal caution, social investment, and labor market reform.
“Spain is leveraging its domestic market intelligently,” said Helena Duarte of the IMF. “It has built a cushion against global headwinds that many mid-sized economies lack.”
Conclusion: Betting on Itself
Spain’s insistence on keeping its 2.6% growth forecast is more than a number—it’s a statement of faith. Faith that jobs will keep growing, that shoppers will keep spending, and that the country’s internal demand can outlast the world’s tariff tantrums.
It’s a bet that might make Spain not just a survivor of the global trade storm—but a model for how mid-sized economies can thrive when globalization turns rough.
The gamble is simple: if Spaniards keep opening their wallets, the GDP will keep growing.