The Bank of Spain cuts its GDP forecast for 2025 by three-tenths to 2.4% and lowers its 2026 forecast to 1.8%.

The Bank of Spain has cut its forecast for Spanish Gross Domestic Product (GDP) growth in 2025 by three-tenths to 2.4%, while lowering its 2026 estimate by one-tenth to 1.8%, amid a context marked by tariffs and uncertainty about future global economic policies.

This was announced by the Governor of the Bank of Spain , José Luis Escrivá , during his speech this Monday in the Congress of Deputies.

Although the organization is expected to publish its full report on macroeconomic projections this Tuesday, Escrivá wanted to advance the forecasts for the Spanish economy, which is currently marked by high uncertainty and an "extraordinarily complex" environment .

Spain's direct trade exposure to the United States is limited and less than that of other major European Union economies , although indirect trade exposure is greater in some sectors, such as chemicals, due to the economy's integration into global value chains.

Therefore, the Bank of Spain warns that in a more adverse scenario, with a prolonged tariff escalation, the growth rate of the Spanish economy would be reduced by 0.4 percentage points in 2025 and 0.7 in 2026 compared to the baseline scenario considered by the Bank of Spain, while inflation would be reduced by between 3 and 5, respectively.

The governor explained that the Spanish economy is experiencing a slowdown in growth, from rates above 3% to around 2.5% in the first half of 2025. The main factor behind this is the lower contribution of the foreign sector.

Furthermore, according to the Bank of Spain survey, uncertainty is the main factor affecting businesses. Thirty percent of companies report being affected by tariffs, and 80% of those affected say uncertainty is a significant factor.

The Bank of Spain's new forecasts point to an average headline inflation rate of 2.4% in 2025 , one-tenth of a percentage point lower than projected in March. Beyond 2025, the deflationary process is expected to continue into 2026, when it would fall to 1.7%.

Regarding the labor market, the agency has maintained its forecast for the unemployment rate in 2025 at 10.5% , although it has raised its projection for 2026 by two-tenths of a percentage point compared to the previous report, to 10.2%.

On the fiscal front, the institution has maintained its estimates for the public deficit in 2025 and 2026 at 2.8% and 2.6% , respectively. Regarding public debt, the Bank of Spain has raised its forecast for 2025 by one-tenth of a percentage point, to 101.4% of GDP, a percentage that is expected to remain the same in 2026.