Spanish Growth Masking Hidden Strains

Spain's economy may appear to be thriving, with forecasts suggesting growth of 2.4% this year and 1.9% next year.

However, economist Marc Vidal warns that these numbers mask underlying strains in the economy.

Rising tax revenue, persistent inflation, and a population boom are all contributing to the growth story, but Vidal argues that these factors are unsustainable.

The main driver of growth is now domestic demand, with people spending more at home.

Inflation is also a concern, with S&P Global Ratings forecasting it to reach 3.2% in 2026, above the eurozone average and impacting real household incomes.

Vidal notes that population growth is swelling faster than job creation, leading to growth being spread thin.

Nominal numbers are up, but per capita gains are much weaker, according to BBVA Research, OECD, and S&P forecasts.