SURGING past its closest rivals, the country has emerged as one of Europe’s standout economic performers amid wider stagnation across the bloc.
Spain’s economy grew by 2.8% in 2025 to reach €1.68 trillion, according to confirmed data released by the National Statistics Institute (INE) on Wednesday, driven by strong household consumption and business investment.
The figure places Spain ahead of major European economies including France and Italy, reinforcing its position as one of the fastest-growing large economies in the region.
France recorded growth of just 0.7% in 2025, while Italy lagged further behind at 0.4%.
Other southern European economies also posted solid results, with Greece expanding by 2.1% and Portugal by 1.9%, though both remained below Spain’s pace.
Across the European Union, GDP rose by 1.5% in 2025, highlighting how Spain is growing at nearly double the EU average.
Ireland recorded the highest growth in the EU at 12.3% in 2025.
The INE also confirmed that the economy grew by 0.8% in the final quarter of the year, creating a carryover effect that points to baseline growth of around 1.1% for 2026 even without fresh stimulus.
Despite the strong performance, the 2025 figure marks a slight slowdown from the 3.5% growth recorded in 2024.
Over the past decade, Spain’s economy has shifted between stability, crisis and rapid recovery.
Between 2016 and 2019, growth remained steady, ranging from 2.9% to 2.0% and consistently outperforming the Eurozone average.
This trajectory was abruptly reversed in 2020, when the economy contracted by 10.9% due to the COVID-19 pandemic, one of the deepest declines in Europe.
The collapse was largely driven by Spain’s reliance on tourism and services, which were heavily impacted by lockdowns.
A sharp rebound followed, with GDP expanding by 6.7% in 2021 and 6.4% in 2022 as demand surged and travel resumed.
Growth stabilised in the following years, including a strong 3.5% expansion in 2024 supported by record tourism and exports.
The 2.8% growth recorded in 2025 signals a shift towards a more sustainable pace while still outperforming key European peers.
Household consumption remained a key driver, rising by 3.3% over the year, supported by job creation and population growth linked to immigration.
Investment also played a major role, with gross fixed capital formation increasing by 5.8%, including a 5.2% rise in construction and a 7.4% jump in capital goods.
Domestic demand accounted for all of the growth in 2025, while external demand weighed on performance, subtracting 0.7 percentage points from GDP.
However, exports of non-tourism services surged by 11.1%, particularly in consultancy, IT and transport linked to rising passenger numbers.
READ MORE: Spain shoulders 20% of all GDP growth in the eurozone as traditional powerhouses stagnate
The Ministry of Economy said Spain is now leading advanced economies for the second consecutive year and growing at twice the rate of the Eurozone.
It also highlighted a 0.7% increase in productivity per hour worked, describing the period as an “unprecedented growth cycle” combining job creation with efficiency gains.
Looking ahead, forecasts point to continued but more moderate expansion in 2026.
The International Monetary Fund predicts growth of 2.1%, while Standard & Poor’s estimates 1.9%, Funcas projects 2.2% and BBVA Research expects 2.4%.
The Bank of Spain is due to publish updated macroeconomic projections shortly.
Economists say Spain has re-established itself as a key growth engine within the Eurozone, even as global uncertainty and weaker external demand pose risks.
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