Household consumption will replace public spending as the main driver of growth in the Spanish economy in 2025. CaixaBank Research revises next year’s GDP upwards to 2.3%, driven by a slight acceleration in private spending – which will contribute around 1.4 points to total activity – while public investments will cancel out positions resulting from the greater restrictions of the spending rule that compliance with European rules implies.
Concretely, the entity expects that families will continue to recover purchasing power in the months to come, thanks to the end of the period of inflationary pressures. Added to this is permanent support for job creation. “The labor market will continue to be an engine of growth: we expect an average net creation of just over 400,000 jobs in 2025 and a slight drop in the unemployment rate, elements which will create more wealth and strengthen household consumption”, underlines the forecast report published this Monday.
Behind the vigor of the economy, there will also be tourism, which will continue to pull GDP between 0.4 and 0.5 points, a figure which – however – will be lower than that reached in 2024, three tenths less, which indicates a certain normalization of this sector. , after the strong recovery initiated after the pandemic. Finally, demographics will continue to play in favor of GDP. Over the past two years, the population has grown by about 1% per year, largely due to the arrival of a million immigrants. This flow has increased and rejuvenated the workforce. Projections indicate that the population will continue to increase in the coming years at a rate of 1%.
However, CaixaBank’s forecasts envisage several short-term risks. One of them points the finger at the real estate market, which they consider to be “a bottleneck” capable of stopping immigration flows. However, if real estate policies consolidate and Spain begins a phase of building new construction, this could increase the arrival of immigrants dedicated to the workforce that will be needed to increase the promised social housing stock by the central administration and the various LACCs.
For their part, the elimination of tax cuts on energy and food and reductions on transport will also have a slight downward impact on growth, via its upward effect on the inflation of these items. However, the overall inflation dynamics will be positive. The analysis service forecasts that core inflation (that which excludes energy and food) will fall from growth of 2.7% in 2024 to around 2% in 2025.
In fact, Spain will also have two other allies to strengthen its growth figures. The drop in rates and the contribution of European funds will give greater room for growth in investments, particularly those dedicated to housing and equipment. In fact, the document expects the ECB to continue normalizing its monetary policy throughout 2025, with four consecutive cuts that will bring interest rates down to 2.5%. This will help mobilize savings retained by households, which will begin to be invested in consumption. “We must keep in mind that the impact of a drop in rates takes some time to be transmitted to the economy,” recognizes the entity. These delays explain why the positive impact of interest rate cuts on GDP growth is expected to be relatively modest in 2025 and of a magnitude similar to that of the savings rate.
This is where CaixaBank highlights one of the risks it is considering. The paper says that if the savings rate declines faster or to lower levels than estimated, it would have a negative impact on GDP growth. Added to this are the additional risks linked to geopolitical conflicts which remain open, to the intensification of the crisis in the Middle East and, above all, to the acceleration of the tariff spiral which could worsen after the victory of Donald Trump in the presidential elections. USA. All this could increase energy prices and reduce exports, taking away tenths of a percentage point from the expected progress of the Spanish, but especially European, economy. In fact, projections already rule out that the contribution of the foreign sector will be more modest than in 2024, partly due to a rebound in imports due to greater strength in domestic demand.
