Macroeconomic projections and quarterly report on the Spanish economy. September 2025

Global economy 1 Global economic activity picked up in Q2, driven by the United States, although there was some deceleration in the euro area and China 8 2 The global disinflation process slowed in the summer months 9 3 Policy rate cuts have continued in most advanced and emerging market economies 10 4 Tariffs have increased under the EU-US tariff agreement and, despite easing somewhat, uncertainty remains high 11 5 Stock market indices have risen, long-term interest rates have changed slightly in the euro area and the euro's exchange rate against the dollar has stabilised 12 Euro area economy 6 In the euro area, economic activity slowed in Q2 ... 13 7 ... while headline inflation has held at around 2% 14 8 The ECB has kept its key interest rates unchanged in September 15 Spanish economy 9 The Spanish economy's growth rate edged up to 0.7% in the second quarter 16 10 The latest short-term data suggest that the Spanish economy will continue to grow at a robust pace in the third quarter 17 11 Job creation has continued to grow in the third quarter at a pace similar to that observed in the first half of the year 18 12 The cost of new lending has continued to decline in recent months, albeit more moderately than earlier in the year 19 13 Loans to households grew at a pace in line with previous months, while financing to firms rose 20 14 Declining interest payments lowered the debt burden ratio for households and firms in the first few months of the year 21 15 Household consumption continues to grow at a strong pace, albeit somewhat slower than in the second quarter 22 16 Recent momentum in productive investment is expected to continue, while residential investment is set to slow down in the coming months 23 17 The external sector may continue to weigh negatively on GDP growth in Q3 due to the rise in imports 24 18 Strong government revenue growth is improving the general government balance despite rising expenditure 25 19 The rise in energy prices has pushed up headline inflation since May, while core inflation has remained stable 26 20 Unit labour costs continued to accelerate in 2025 Q2 27 21 Domestic inflationary pressures remain relatively moderate, partly on account of lower unit profit margins 28 MACROECONOMIC PROJECTIONS FOR THE SPANISH ECONOMY (2025-2027) 29 22 Main assumptions and considerations underlying the projections 30 23 GDP growth is expected to decelerate over the coming quarters 32 24 In the years ahead economic growth will be underpinned by the buoyancy of domestic demand 33 25 GDP growth in 2025 is revised up by 0.2 pp from the June projection exercise 34 26 Job creation will slow over the projection horizon, in line with the deceleration in activity, albeit with a slight uptick in productivity per person employed 35 27 The government deficit trajectory is expected to improve slightly over the 2025-27 horizon in comparison with the June projections 36 28 Headline inflation is expected to begin easing towards rates close to 2% from October onwards 37 29 Core inflation will edge down in the final months of 2025, before picking up slightly in 2026 Q1 38 30 The current projections entail a slight upward revision to the headline rate of inflation for 2025, while those forecast for 2026 and 2027 remain largely unchanged 3931 The risks to the baseline scenario in these projections are tilted to the downside for activity and balanced for inflation