Spain’s economy has demonstrated robust performance in recent years, expanding by 10% cumulatively since the fourth quarter of 2019—outpacing most European counterparts. This strong foundation offers an opportunity to address long-term structural challenges, according to a new report by the OECD. Sustained growth will depend on advancing reforms and ensuring fiscal sustainability, particularly as demographic and economic pressures mount.
The latest OECD Economic Survey of Spain projects GDP growth of 2.9% in 2025, gradually easing to 2.2% in 2026 and 1.8% in 2027. Inflation is expected to continue its decline, reaching 2.3% in 2026 and 1.8% in 2027 after 2.6% in 2025.
OECD Secretary-General Mathias Cormann emphasized the importance of accelerating fiscal consolidation to rebuild buffers for future shocks. “Strengthening productivity growth—especially among small and medium-sized enterprises—by improving access to finance and reducing administrative burdens will help Spain boost business dynamism and growth,” he said during the report’s launch in Madrid with Spain’s Minister of Economy, Trade and Business, Carlos Cuerpo.
Pension reform is a key priority. Introducing adjustments based on life expectancy and extending the reference period for calculating benefits would enhance long-term fiscal stability. On the revenue side, harmonizing value-added tax (VAT) rates and reducing exemptions could improve efficiency and generate additional income. Lowering labor income taxes for low-earning individuals may also strengthen work incentives and labor market participation.
Creating a more supportive environment for small and medium-sized enterprises (SMEs) is critical for innovation and productivity. Enhancing access to financing, reducing regulatory complexity, and encouraging investment in skills and technology can drive firm-level growth. Streamlining application and reimbursement procedures for public research and development funding—especially for smaller firms—could unlock significant innovation potential.
To address labor shortages linked to an aging population, policies should encourage older workers to remain employed longer. Reforming the non-contributory unemployment assistance system and offering age-appropriate training programs can boost participation. Additionally, simplifying and expediting the recognition of foreign qualifications would improve labor market integration for migrants, expanding the workforce and helping meet future skill demands.
Climate resilience remains a strategic focus. Continued investment in grid infrastructure, improved water-use efficiency, and further decarbonization of transport are essential to meet emissions targets and reduce climate-related risks.
— news from OECD
— News Original —
Spain can foster continued strong economic growth by advancing structural reforms and optimising public finances
Spain’s economy has performed strongly in recent years, expanding by a cumulative 10% since the fourth quarter of 2019 and significantly outperforming its European peers. This strong momentum provides a strong foundation for tackling longer-term challenges. Policy should focus on continuing structural reforms and securing fiscal sustainability to maintain growth and prepare for future shocks, according to a new OECD report. n nThe latest OECD Economic Survey of Spain says that GDP growth will remain robust at 2.9% in 2025 and gradually decelerate to 2.2% in 2026 and 1.8% in 2027. Consumer price inflation will continue to decline to 2.3% in 2026 and 1.8% in 2027, after 2.6% in 2025. n n“Accelerating the pace of fiscal consolidation would help rebuild fiscal buffers to respond effectively to future shocks, including by addressing the rise in pension spending and optimising tax revenues,” OECD Secretary-General Mathias Cormann said, presenting the Survey in Madrid alongside Spain’s Minister of Economy, Trade and Business Carlos Cuerpo. “Strengthening productivity growth – especially among small and medium-sized enterprises – by improving their access to finance and by reducing administrative burdens will help Spain boost business dynamism and growth.” n nReforming pensions, for example by introducing a life expectancy adjustment and extending the reference period for the calculation of pension rights, would help secure fiscal sustainability. Harmonising value-added tax rates and cutting exemptions would improve efficiency and raise revenues. Reducing labour income taxes for low-income earners could help strengthen work incentives. n nCreating a more business-friendly environment for small and medium-sized firms would foster productivity gains and firm growth. This can be supported by improving access to finance, easing regulatory burdens and promoting innovation and skills investment. Simplifying access to public research and development support by streamlining application and reimbursement procedures, particularly for smaller firms, could unlock significant innovation potential among these firms. n nStrengthening incentives for older workers to remain in employment will help address the challenges of an ageing population, including by reforming the non-contributory unemployment assistance system. Tailoring training to older workers’ needs can further raise participation. In addition, improving the labour market performance of migrants, including by simplifying and accelerating the recognition of foreign qualifications, would expand labour supply and help meet future skills needs. n nClimate change mitigation and adaptation efforts need to be maintained to meet emissions reduction targets and reduce climate-related risks. Priorities should include continuing to increase grid investment, improving water-use efficiency and facilitating further transport decarbonisation. n nSee an Overview of the Economic Survey of Spain with key findings and charts (this link can be used in media articles).