Spain’s economy expanded by 0.6% in the first quarter of 2025, marking the slowest pace of growth in seven quarters and coming in just below market expectations of 0.7%.
Spain GDP grows the least in seven quarters
The figure follows a downwardly revised 0.7% expansion in the final quarter of 2024. While the deceleration points to some moderation in momentum, Spain continues to outperform many of its Eurozone peers. The International Monetary Fund recently revised its full-year growth forecast for Spain upward to 2.5%, highlighting the country’s resilience in the face of ongoing global headwinds.
Nonetheless, near-term risks have surfaced. A widespread blackout that hit much of the country on Monday—caused by a cascading grid failure linked to external cyber interference—is expected to dent economic activity in the early part of Q2. Preliminary estimates from economists suggest the disruption could temporarily reduce GDP by up to 0.5 percentage points, although much of this loss may be recouped in subsequent weeks as energy services are restored and production rebounds.
Growth remained broadly supported by domestic demand
In Q1, growth remained broadly supported by domestic demand, which contributed 0.4 percentage points to the overall expansion. Household consumption rose by 0.4%, underpinned by stable labor market conditions and easing inflation, which helped preserve purchasing power. Public sector spending also provided modest support, rising 0.2%, while gross fixed capital formation increased by 0.6%, reflecting continued confidence in the business sector and ongoing EU-funded infrastructure initiatives.
On the external front, net trade added 0.2 percentage points to GDP growth. Exports of goods and services advanced by 1%, buoyed by stronger demand from Latin America and non-EU trading partners, while imports fell 0.7%, indicating some easing in domestic demand for foreign goods. The improvement in the trade balance suggests Spain is benefitting from more competitive pricing and supply chain diversification.
Sector-wise data
Sector-wise, all major components of the economy registered gains. Industrial output rose 1.1%, with manufacturing activity up 0.8% on stronger orders and a rebound in energy-intensive sectors. Construction grew 0.4%, supported by both residential and infrastructure investment. The services sector, which accounts for the majority of GDP, expanded by 0.3%, with hospitality and tourism continuing to perform well amid a strong early Easter season. Meanwhile, the agriculture and fishing sector saw a sharp rebound, surging 7.1% after a 0.7% contraction in the previous quarter, helped by favorable weather and improved yields.
On an annual basis, Spain’s GDP grew by 2.8% in Q1, a solid performance that underscores the country's relative strength within a Eurozone still grappling with sluggish growth and tight monetary conditions. However, looking ahead, risks remain tied to geopolitical tensions, energy security, and the impact of any further monetary policy tightening from the European Central Bank.
