The Bank of Spain predicts growth of 2.3% for the Spanish economy this year, a tenth more than the previous estimate from December, despite the war in the Middle East, the institution announced this Friday, the 27th.
For the central bank, the measures approved by the Government to respond to the impact of the war substantially offset, for now, the repercussions of the conflict on the growth of the Gross Domestic Product (GDP).
According to the Bank of Spain, without the measures put forward by the Government, GDP growth this year would be limited to 2%.
Highlighting the great uncertainty of the situation, the Spanish central bank considers that, if the war prolongs and there is a “severe” scenario, in which a barrel of oil reaches 145 dollars, Spain’s GDP could be limited to 1.9%.
The Spanish economy grew by 2.8% in 2025 and 3.5% in 2024, according to the most recent official data.
As for inflation, the Bank of Spain’s new forecast is that it will be 3% this year, 0.9 points more than the previous estimate, due, among other factors, to the “sudden increase in the price of energy raw materials – oil and gas – after the start of the conflict” in the Middle East, with attacks by the USA and Israel on Iran on February 28.
The forecast for the balance of Spanish public accounts is a deficit of 2.3% this year (plus two tenths) and that the national debt will fall to 99.2% of GDP.
For 2027, the central bank forecasts GDP growth in Spain of 1.7% and an average annual inflation of 2.5%.
According to an inflation estimate published today by the Spanish National Statistics Institute (INE), prices in Spain rose 3.3% in March, during the first month of the war, compared to the same month in 2025, because of fuel.
In February, annual inflation (price rise compared to the same period of the previous year) was 2.3%.
If today’s INE estimate is confirmed, inflation in Spain was the highest in March since June 2024.
Fuel prices are being affected by the war between the United States and Israel and Iran.
Last week, the Spanish Government approved a plan with 80 measures to respond to the impact on prices of the war in the Middle East.
The measures include a reduction in VAT on fuels, electricity and natural gas from 21% to 10%, as well as discounts and aid on diesel for transport companies and the agricultural and fishing sector and support for the purchase of fertilizers for agriculture.
In parallel, the executive reinforced support for the payment of electricity for families considered vulnerable and a maximum price was also established for butane and propane gas.
In the case of electricity, there is a 60% global drop in taxes and, on fuels, VAT has risen to the minimum value allowed by the EU.
The Comprehensive Response Plan for the crisis in the Middle East, which also includes incentives for investments in renewable energy, should mobilize five billion euros of resources, according to the Government.
The Bank of Spain considered today that, despite the positive elements, this plan should have included “more focused and selective” measures for the most vulnerable families.
“By not focusing on the most vulnerable households, it presents limitations in terms of redistributive effectiveness” and “more targeted and selective alternatives would allow achieving a similar level of protection, as well as reducing distortions” in some prices, defended the central bank, in a document released today.
At the end of last week, the International Monetary Fund (IMF) reduced its growth forecast for Spain by two tenths of a percentage point, to 2.1% at the end of 2026, due to the negative impact of the war in the Middle East.
The inflation rate in Spain is expected to remain at around 3% by the end of 2026 and rise to 2.2% by the end of 2027, according to the IMF’s annual report on the Spanish economy.
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