Spain is one of the few bright spots in the latest global economic forecast from the International Monetary Fund (IMF). While growth in much of the world is slowing down due to rising trade tensions and economic uncertainty, Spain’s economy is still expected to grow.

In its April 2025 World Economic Outlook, the IMF raised Spain’s growth forecast to 2.5% for this year. This is despite the fact that many major economies are seeing their forecasts cut.

Global Growth Slows as Trade Wars Take a Toll

The IMF now expects the world economy to grow by just 2.8% in 2025, down from its earlier estimate of 3.3%. This is partly due to new tariffs and trade restrictions, especially those introduced by the United States. These trade barriers have affected global supply chains and raised costs for businesses.

The Eurozone is also feeling the pressure. Growth across the euro area is expected to be just 0.8% this year, with Germany and France, two of the region’s largest economies, struggling to grow at all. The IMF described their outlook as ‘sluggish’ and said some countries are already on the edge of recession.

Why Spain Is Doing Better Than Its Neighbours

Spain is bucking the trend. In 2024, its economy grew by 3.2%, which was much stronger than expected. The country is now expected to continue growing steadily in 2025.

The IMF says Spain’s success is due to a few key reasons:

• A Strong Service Sector: Businesses such as hotels, restaurants, and tourism have done particularly well, helping to boost the wider economy.
• More People Joining the Workforce: Spain’s labour force is growing, partly thanks to immigration. This is giving the economy more energy and keeping domestic demand high.
• Less Exposure to the US Market: Unlike Germany and other countries, Spain doesn’t depend as heavily on trade with the United States. This has helped protect it from the effects of the US-led trade war.
• Increased Investment: Both public and private investment levels in Spain have been stronger than in many other advanced economies.

Inflation, Jobs, and What to Watch

Inflation in Spain is expected to stay under control, with prices forecast to rise by 2.2% in 2025 and 2.0% in 2026. This is close to the European Central Bank’s target and good news for households.

However, unemployment is still a concern. Spain’s unemployment rate is expected to stay around 11% through 2026. The IMF explains that while job creation is strong, the growing population, especially through immigration, means it will take longer to bring the unemployment rate down.

Big Risks Ahead for the Global Economy

The IMF warns that global risks are rising. Here are some of the main concerns:

• More Trade Disputes: Ongoing tension between the world’s biggest economies, especially the US and China, could lead to more tariffs and disruptions.
• Geopolitical Conflicts: War and unrest in parts of the world could affect trade and energy prices.
• Higher Borrowing Costs: As interest rates remain high, it could become harder for businesses and governments to borrow and invest.

The IMF is also worried that some countries, particularly in the developing world, may struggle with debt and need support to avoid financial crises.

Final Thoughts

While the global outlook is less optimistic than before, Spain is proving to be more resilient than many expected. Its strong internal demand, steady job creation, and solid service sector are helping it stay on track.

Even so, the challenges ahead, such as high unemployment and uncertain global conditions, mean that continued investment and smart economic policies will be key to keeping up the momentum.