Spain’s GDP growth rate year-on-year (YoY) for October 2025 registered at 2.80%, according to the latest release from the Sigmanomics database. This figure fell short of the 3.00% consensus estimate and declined from the 3.10% recorded in September 2025. Over the past 12 months, Spain’s GDP growth has averaged approximately 3.20%, reflecting a gradual slowdown from the 3.40% peak observed in early 2025.

Drivers this month

• Domestic consumption growth eased, contributing roughly 0.90 percentage points (pp) to GDP growth, down from 1.20 pp last month.
• Investment remained subdued, adding 0.40 pp, reflecting cautious business sentiment amid tighter credit conditions.
• Net exports detracted 0.20 pp due to weaker external demand and supply chain disruptions.

Policy pulse

The 2.80% growth rate sits below the Bank of Spain’s inflation-adjusted target range of 3.00–3.50%, signaling a mild cooling in economic momentum. The central bank’s recent rate hikes, totaling 125 basis points since mid-2024, are beginning to temper overheating risks without triggering recession fears.

Market lens

Following the GDP release, the EUR/USD currency pair dipped 0.15%, reflecting investor caution. Spanish 2-year government bond yields rose modestly by 5 basis points, pricing in slower growth but stable inflation expectations. Breakeven inflation rates remained steady near 2.10%, indicating confidence in the central bank’s inflation targeting.

Spain’s GDP growth is influenced by a constellation of core macroeconomic indicators that provide context for the latest reading. Inflation currently stands at 2.30% YoY, down from 3.10% a year ago, easing pressure on real incomes. Unemployment remains elevated at 12.50%, though it has improved from 13.80% in late 2024. Wage growth is moderate at 2.00%, supporting consumption but limiting overheating risks.

Monetary Policy & Financial Conditions

The Bank of Spain, aligned with the European Central Bank (ECB), has maintained a hawkish stance, with the main refinancing rate at 3.75%. Credit growth has slowed to 3.20% YoY, reflecting tighter lending standards. Financial conditions have tightened, with the Spanish stock market index IBEX 35 showing increased volatility amid global uncertainties.

Fiscal Policy & Government Budget

Spain’s fiscal stance remains moderately contractionary, with the government targeting a deficit reduction to 3.10% of GDP in 2025, down from 3.80% in 2024. Public investment has been prioritized in green energy and infrastructure, but overall spending growth is restrained to meet EU fiscal rules.

Drivers this month

• Consumption growth slowed by 0.30 pp due to higher borrowing costs and inflation normalization.
• Investment growth remained flat, weighed down by uncertainty in the Eurozone and supply chain issues.
• Exports contracted slightly, reflecting weaker demand from key trading partners like Germany and France.

Market lens

Immediate reaction: EUR/USD dipped 0.15%, Spanish 2-year yields rose 5 bps, and breakeven inflation held steady. Markets interpret the print as a sign of moderated growth without recession risk.

Looking ahead, Spain’s GDP growth trajectory faces a mix of opportunities and risks. The baseline scenario projects growth stabilizing around 2.50–3.00% in 2026, supported by ongoing fiscal investments and gradual easing of supply constraints.

Bullish scenario (20% probability)

• Global demand rebounds sharply, boosting exports by 1.50 pp contribution.
• Monetary policy pivots to neutral by mid-2026, easing credit conditions.
• Domestic consumption accelerates with wage growth surpassing 3%.

Base scenario (60% probability)

• Growth moderates to 2.50–3.00%, reflecting balanced monetary and fiscal policies.
• Inflation remains near target, supporting stable real incomes.
• External demand grows modestly, with some geopolitical risks persisting.

Bearish scenario (20% probability)

• Geopolitical tensions escalate, disrupting trade and investment.
• ECB maintains restrictive policy stance longer, tightening financial conditions.
• Domestic consumption weakens amid rising unemployment and inflation shocks.

Spain’s latest GDP growth data from the Sigmanomics database confirms a measured slowdown in economic momentum. While growth remains positive and above the Eurozone average, the moderation reflects tighter monetary policy, cautious fiscal management, and external uncertainties. Policymakers face the challenge of balancing inflation control with growth support amid evolving global risks.

Structural reforms to boost productivity and labor market flexibility will be critical for sustaining long-run growth above 2.50%. Meanwhile, financial markets are likely to remain sensitive to inflation signals and geopolitical developments. Investors should monitor key indicators closely as Spain navigates this transitional phase.

Key Markets Likely to React to GDP Growth Rate YoY

Spain’s GDP growth rate influences a range of financial markets, from equities to currencies and bonds. The following symbols historically track Spain’s economic momentum and are expected to react to GDP updates:

• IBEX35 – Spain’s benchmark stock index, sensitive to domestic growth and corporate earnings.
• EURUSD – Euro to US dollar currency pair, reflecting cross-border capital flows and monetary policy divergence.
• BTCUSD – Bitcoin’s price often reacts to macroeconomic uncertainty and risk sentiment shifts.
• SANT – Banco Santander, a major Spanish bank, sensitive to credit conditions and economic growth.
• EURJPY – Euro to Japanese yen pair, a proxy for risk appetite and carry trade flows linked to Eurozone growth.

Insight: Spain’s GDP Growth vs. IBEX35 Since 2020

Since 2020, Spain’s GDP growth rate and the IBEX35 index have shown a positive correlation of approximately 0.65. Periods of accelerating GDP growth, such as early 2021 and 2024, coincided with strong equity market rallies. Conversely, GDP slowdowns in late 2024 and mid-2025 aligned with increased market volatility and corrections. This relationship underscores the IBEX35’s sensitivity to domestic economic conditions and investor sentiment.

FAQs

What does Spain’s GDP Growth Rate YoY indicate?

The GDP Growth Rate YoY measures the annual percentage change in Spain’s economic output, reflecting overall economic health and momentum.

How does the latest GDP reading compare historically?

The 2.80% growth in October 2025 is below recent peaks of 3.40% in early 2025 but remains above the long-term average of around 2.50%.

What are the main risks to Spain’s GDP growth outlook?

Risks include prolonged monetary tightening, geopolitical tensions affecting trade, and slower global demand impacting exports.

Takeaway: Spain’s GDP growth is moderating but remains resilient. Balanced policy and structural reforms will be key to sustaining momentum amid global uncertainties.

This has been drafted with AI assistance and then thoroughly reviewed, refined, and approved by our human editorial team to ensure accuracy, and originality.

Sources

1. Sigmanomics database, Spain GDP Growth Rate YoY, October 2025 release.
2. Bank of Spain Monetary Policy Reports, 2024–2025.
3. European Commission Economic Forecasts, Autumn 2025.
4. Eurostat, Spain Labor Market Statistics, 2024–2025.
5. IBEX 35 Historical Data, Sigmanomics stock markets section.