Spain raises 2026 GDP growth forecast to 2.6% despite war uncertainty

The Spanish government has raised its 2026 economic growth forecast by four-tenths of a percentage point, projecting annual GDP growth of 2.6%.

The upgrade comes despite uncertainty caused by the war between the United States, Iran and Israel, which has disrupted global energy markets, according to sources at Spain's Economy, Trade and Business Ministry.

The executive is set to approve the macroeconomic framework at Monday's cabinet meeting, which will serve as the basis for preparing the 2027 budget.

The forecasts approved by Pedro Sánchez's government also anticipate year-on-year growth of more than 2% over the next three years.

Spain's inflation holds steady at 3.2% in June

Inflation in Spain remained stable in June, rising 3.2% year-on-year, according to a flash estimate published on Monday by the National Statistics Institute (INE).

The rate has remained unchanged for three consecutive months. The June figure was driven partly by higher electricity and gas prices, which increased during the month.

Meanwhile, lower fuel prices for vehicles helped offset those higher electricity and gas costs.

Underlying inflation, which excludes fresh food and energy products, eased by one-tenth of a percentage point to 2.9% year-on-year in June.

Spain's Economy, Trade and Business Ministry said in a statement that the preliminary Consumer Price Index figure confirmed that government measures introduced to tackle pressures from the war in the Middle East had helped "cushion" the impact on prices.

The Spanish government highlighted that fuel prices, which had been the main driver pushing inflation higher during the most intense months of the conflict, were now making a smaller contribution and were helping bring the June rate down.

The government said it would maintain support measures for families and sectors most affected by the Middle East war from July 1, although it added that "the gradual dissipation of the uncertainty that has marked recent months allows the measures to be adapted and calibrated gradually, without withdrawing protection from those who need it most."

The INE’s flash CPI estimate is a preliminary snapshot of inflation. If confirmed in mid-July, it would mean that the annual inflation rate has remained stable. The final release will also include separate inflation figures for each autonomous community, including Catalonia.