Spain GDP growth remains robust

The Spanish economy grew by 0.7% quarter-on-quarter in the three months to June 2025, slightly above the 0.6% expansion in the previous quarter and beating market expectations of 0.6%, according to preliminary estimates.

This marked the fifth consecutive quarter of growth and highlighted the relative resilience of Spain’s economy amid broader eurozone softness. Domestic demand contributed 0.9 percentage points to growth, offsetting a 0.1 percentage point drag from the external sector.

Household spending increased by 0.8%, supported by a stable labor market and easing inflationary pressures, while gross fixed capital formation surged by 2.1%, reflecting strong investment in equipment and construction. In contrast, government expenditure declined by 0.1%, indicating a modest pullback in public sector support.

On the external front, exports rose by 1.1%, led by gains in tourism-related services and capital goods, while imports climbed 1.7%, driven by energy and consumer goods. Despite this imbalance, the trade drag was minimal compared to previous quarters.

On the production side, industrial output grew by 0.8%, driven by a 1.1% increase in manufacturing, with notable strength in the automotive and machinery sectors. The services sector expanded by 1.2%, buoyed by tourism, retail, and transport activity, while construction activity rose by 1.5% on continued infrastructure spending and residential demand.

However, the primary sector contracted sharply, falling by 9.5%, largely due to adverse weather conditions and lower agricultural yields.

On an annual basis, the Spanish economy expanded by 2.8%, matching the growth rate from the previous quarter and exceeding expectations of a 2.5% increase. Looking ahead, analysts remain cautiously optimistic, though risks persist from weaker external demand, ongoing geopolitical tensions, and uncertainty over the broader eurozone policy environment. Markets now await final GDP figures and upcoming inflation data for further insight into the sustainability of Spain’s growth trajectory.