Ben Pawlowski
SPAIN’S economy continues to outpace its European rivals after the National Statistics Institute (INE) confirmed growth of 0.6% in the first quarter of 2025.
Despite narrowly lagging behind the UK (0.7%), Spain remains ahead of Eurozone peers Italy (0.3%), Germany (0.2%), France (0.1%) and neighbouring Portugal (-0.5%).
However, the growth is marginally lower than the 0.7% growth in the previous three-month period, and below forecasts which had predicted 0.7% amid geopolitical tensions and the looming threat of President Trump’s tariffs against trade from EU member states.
According to the INE, heavy industry and manufacturing continued to expand fast, while construction and the services industry had slowed.
The news coincides with an increase in unemployment across the quarter to 10.36%.
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In June, the Bank of Spain lowered its internal forecast for annual growth from 2.7% to 2.4%, lower than last year’s impressive figure of 3.2%.
However, this remains significantly higher than the Eurozone average of 0.9%.
Jose Luis Escriva, the head of Spain’s central bank, linked the lower forecast to the tariff war involving the US, China and the EU.
Although Spanish exports to the US represent just 1% of total GDP – concentrated in products such as olive oil – the economy may suffer elsewhere, with a potential recession in Germany likely to impact Spain’s flourishing tourism sector.
Economists expect a further drop in the second quarter of 2025, provoked by April’s day-long blackout which wiped out power across the Iberian peninsula and brought Spain to a standstill.
According to Miguel Cardoso, chief economist at BBVA, the massive power cut will likely dent GDP growth by 0.1-0.2%.
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