The Bank of Spain has forecasted economic growth between 0.5% and 0.6% for the second quarter of 2025, slightly lower than the 0.6% recorded in the previous quarter. This update follows a recent downgrade of Spain’s annual growth forecast from 2.7% to 2.4%, which still surpasses the Eurozone average. Governor José Luis Escrivá highlighted global trade tensions as the primary challenge to Spain’s economic growth. Chief economist Ángel Gavilán explained that the current projections assume a baseline scenario of a 10% U.S. tariff on European goods without retaliation. However, if the EU imposes counter-tariffs of 20%, growth could drop to 2% this year and further decline to around 1% by 2026. The central bank also warned of a “gradual slowdown” in Spain’s economic growth despite hopes for increased European spending on infrastructure and defense. Existing tariffs on steel, aluminum, and automobiles, along with potential reciprocal tariffs, exacerbate these challenges. The ongoing trade tensions between the EU and the U.S. could hinder expected recovery from European investments, especially as the European Central Bank anticipates slower continental growth this year.
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