The Bank of Spain published Governor José Luis Escrivá’s presentation on Spain’s economic environment and future challenges, incorporating the central bank’s September 2025 macroeconomic projections. The projections revise up 2025 GDP growth to 2.6% on the back of domestic demand, while inflation is projected at 2.5% in 2025 and 1.7% in 2026, and the unemployment rate is expected to fall from 10.5% in 2025 to 10.2% in 2026; the presentation also notes that no build-up of macroeconomic imbalances has been detected so far. The international backdrop highlighted an EU-US agreement setting a general minimum tariff of 15% on European exports, alongside uncertainty about practical implementation of additional EU commitments. The presentation referenced the Federal Reserve’s 25 basis point rate cut to 4.0%–4.25% after a nine-month pause, while the European Central Bank kept its deposit facility at 2%, and pointed to relatively low market volatility and a broadly stable euro-dollar exchange rate. On Spain’s medium-term challenges, Escrivá underscored high public debt (projected at 100.7% of GDP in 2025), shortcomings in medium-term fiscal planning under the reformed EU fiscal rules, skills mismatches in the labour market despite strong employment growth, and a housing supply shortfall of 400,000–450,000 homes in 2022–2024 with a further deficit potentially above 100,000 in 2025. He also pointed to a long-standing productivity gap and linked productivity outcomes to institutional quality, citing Bank of Spain research that estimates around 12,000 new norms are issued each year across Spain’s three levels of government.

Original source View in tracker