The Spanish economy is holding steady with growth that is gradually moderating

La Spanish economy demonstrated remarkable resilience during the first quarter of 2025, maintaining an expansionary path although with a slight moderation in its growth rate. According to data from the Quarterly National Accounts published by the National Statistics Institute (INE), the Gross Domestic Product (GDP) advanced 0,6% compared to the previous quarter.

On a year-on-year basis, GDP growth stood at 2,8 %, which represents a decrease of five tenths of a percentage point compared to the end of 2024. This annual dynamism is mainly based on the national demand, who contributed with 3,2 percentage points to growth. In contrast, the external demand rest 0,4 percentage points.

Household consumption emerged as one of the main drivers of domestic demand, experiencing year-on-year growth of 3,5 %, just one tenth lower than the previous quarter. However, the main protagonist was the productive investment, having a gross fixed capital formation in machinery and capital goods that was fired 8% year-on-year, exceeding by 1,2 percentage points the already significant advance of the last quarter of 2024.

In contrast, the public consumption showed a slowdown, growing by 3,1 % year-on-year (compared to 3,8% in the previous quarter), and the investment in construction and housing It also cooled down, with an advance of 2,2 %, two percentage points below the previous quarter.

The negative contribution of the foreign sector is explained by a greater increase in imports (3,6%) compared to the exports (2,1%) year-on-year.

In this economic context, the employment, measured in full-time equivalent jobs, recorded solid growth 2,9 % year-on-year, exceeding the 2,2% of the previous quarter. This resulted in the creation of more than 585.400 jobs in the last year. However, this increase in employment, slightly higher than that of GDP, caused the labor factor productivity returned to negative territory (-0,1% year-on-year) after three consecutive quarters of growth.

The Spanish Chamber maintains its GDP growth forecasts at 2,4% for 2025 and 1,9% for 2026, although these are subject to the evolution of US tariff policy and the trade war with China.

International Uncertainty and the Spanish Chamber of Commerce's Perspectives

The Spanish Chamber of Commerce has focused on the Uncertainty generated by the United States tariff policy as the main international risk to economic growth. The potential imposition of tariffs on imports from the European Union, currently extended, and the tariffs already in place for China are generating tensions in global trade.

While the direct impact of tariffs of up to 25% on Spanish exports to the US estimated to be limited (around 5% of the total), sectors such as agri-food, machinery, metal manufacturing, and chemical and pharmaceutical products could be affected.

However, the Chamber warns that significant indirect impacts. A lower demand for the Spain's European trading partners, as well as a reduction in the export of services linked to trade in goods, could hinder growth.

Despite this uncertainty, the Spanish Chamber maintains its GDP growth forecasts at 2,4% for 2025 and 1,9% for 2026, although conditioned by the evolution of the US tariff policy and the trade war with China. Regarding employment, growth is estimated at 1,5% in 2025 and 0,8% in 2026, which would bring the unemployment rate to 10,5 % y 10,2 %respectively.

The chamber institution insists on the need to strengthen productivity, following the decline recorded this quarter, through the improvement of human capital, reforms that support businesses, and the promotion of investment in digitalization and R&D.

Finally, the Chamber advocates a realistic medium-term fiscal consolidation strategy to reduce public debt and the structural deficit, which requires the approval of updated General State Budgets geared to the country's needs.