Spanish growth revised up to 2.6 percent, inflation to 3.9 percent
Banco de España raised its 2026 growth forecast for Spain to 2.6 percent and its inflation forecast to 3.9 percent in its third-quarter report. The projections, dated October 9, 2026, also show 2027 growth at 2.2 percent and inflation at 3.7 percent.
Growth outruns the energy shock
Banco de España now projects Spanish GDP growth of 2.6 percent in 2026 and 2.2 percent in 2027, up from 2.3 percent and 1.7 percent in the June projections.
Inflation is expected to reach 3.9 percent in 2026 and 3.7 percent in 2027, revised up by 0.3 and 1.1 percentage points respectively.
The upgrade reflects strong private consumption, job creation and population growth, even as natural gas prices rose 52 percent and oil prices rose 4 percent between May 21 and September 24 amid the stalled Middle East conflict.
The unemployment rate is forecast to fall to 10.0 percent in 2026 and 9.7 percent in 2027, while the public deficit would narrow to 2.6 percent of GDP in 2026 and 2.2 percent in 2027.
Central banks tighten again
The report comes amid a broader tightening cycle: both the Federal Reserve and the European Central Bank raised policy rates by 25 basis points in September, to 3.75-4 percent and 2.5 percent respectively.
Euro area GDP grew 0.6 percent quarter-on-quarter in the second quarter of 2026, beating the Eurosystem's June projection of 0.2 percent.
Long-term sovereign yields have risen sharply across major economies, with Spain's ten-year yield up 55 basis points since the May assumptions cut-off date.
Resilience with a competitiveness catch
Spain's upgrade reflects real resilience, not luck, as growth outpaces the euro area despite the energy shock from Iran.
Yet the inflation gap with the eurozone, now the widest since 2022, signals a competitiveness risk.
With public debt near 100 percent of GDP, Spain has scant room to repeat this subsidy playbook if the shock worsens.