IMF increases Spain's growth forecast to 2.5% despite Trump's tariffs

The financial organisation believes that the adverse impact of the tariffs will be "contained" for the Spanish economy due to its limited trade exposure to the United States

Edurne Martínez

Madrid

Friday, 11 April 2025, 10:05

The Spanish economy can resist - at least for the time being - the blows being struck in the latest international trade war. This is the view of the International Monetary Fund (IMF) that, on Thursday, revised its economic growth forecasts for Spain slightly upwards by two tenths of a percentage point to 2.5%. The organisation, which published its report following an economic assessment carried out by an IMF delegation visiting Spain, forecasts that GDP (gross domestic product) will continue to grow by 1.8% in 2026, although this estimate is closely linked to the risk as to what may transpire in the ongoing global situation.

The multilateral organisation of 191 member countries stated that the adverse impact of the tariffs imposed by Donald Trump will be "contained" for the Spanish economy due to its limited trade exposure to the United States. The IMF, led by Kristalina Georgieva, believes that Spain will continue to make "solid" progress in the short term, before gradually easing up on growth. It also indicates that potential growth in subsequent years will be 1.7% as it will be limited by demographic ageing.

The IMF also forecasts that consumption will remain "robust" thanks to rising real incomes and a gradual decline in household savings, both of which will offset slower job creation. The unemployment rate will remain stable at 11% in the medium term. The analysis further suggests that investment will continue to pick up thanks to interest rate cuts by the European Central Bank (ECB), the deployment of European funds and increased housing construction.

Political fragmentation

The IMF report makes special mention of the positive growth in foreign trade and a "robust" labour market. For this reason, Spain's minister of economy Carlos Cuerpo said, after reading the report, that "our economy continues on the path of modernisation and transformation, consolidating its position as the engine of growth in the eurozone."

That said, at the political level the IMF analysis has indicated that fragmentation may prevent the country from meeting its deficit targets. The IMF acknowledges that the country's public accounts "continued to improve" in 2024, despite the strong expansion of public spending going on wages and social transfers (state aid and benefits paid to households), as well as the damage caused by the 'Dana' storm in Valencia. Still, high public debt and looming spending pressures pose fiscal risks in the medium term. With debt at 101.8% at the end of 2024, Spain's debt trajectory remains "vulnerable to growth and financing cost shocks."

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