The fourth-biggest economy in the euro area is projected to raise its gross domestic product (GDP) by 2.1 per cent year on year, three times the expected 0.7-per cent rise for the currency union.
The Spanish economy is demonstrating ‘structural resilience’ amid the global energy shock, wrote Filippo Taddei, Goldman Sachs’ senior economist for Southern Europe, in a report.
Spain’s economy is expected to significantly outpace the euro area in 2026 as it benefits from higher labour productivity and a strengthening fiscal position, Goldman Sachs Research said.
It is projected to raise its GDP by 2.1 per cent YoY, thrice the expected 0.7-per cent rise for the currency union.
Its unemployment rate has dropped to its lowest since 2008, and employment rate is at an all-time high.
Spain’s unemployment rate has dropped to its lowest level since 2008, and its employment rate is at an all-time high.
Productivity is growing faster than in the European Union’s three other major economies: Germany, France and Italy.
And Spanish government bonds, unlike those of other European nations, have been relatively stable amid soaring energy prices.
While Spanish sovereign spreads have widened in tandem with broad-based inflation and slowing global growth, investors remain confident in the country’s domestic position, Taddei wrote.
“Spain’s macro-outperformance remains visible in economic activity and in sovereign debt pricing,” he said. “Economic activity has continued to run ahead of the euro area and the US since the middle of last year, while sovereign spreads have remained comparatively tight, indicating investors’ confidence in the outlook for Spain.”
The energy shock is slowing the country’s economy and Taddei flagged two key risks that may dim its outlook. This summer, rising energy costs might deter air travel and squeeze tourism, a significant source of economic activity in Spain. And the nation’s volatile political situation—it is governed by a fragile minority coalition—could sap investors’ confidence with the 2027 general election on the horizon.
“Spain’s recent outperformance likely reflects a gradual improvement in the quality—not only the quantity—of labour demand,” added Taddei.
Fibre2Fashion News Desk (DS)
