The Funcas Panel has improved its GDP growth forecast for Spain for 2026 to 2.5%, as a result, it explains, of the "better than expected results in the second quarter of the year", and also, although to a lesser extent, due to the "slight increase in the forecast for the third quarter to 0.5%". However, it has worsened its projection for inflation: it now believes it will close the year at 3.4%.
According to the group in a statement, domestic demand will contribute 2.9 percentage points -two tenths more than in the previous estimate- to GDP growth, while the external sector will subtract four tenths.
On the other hand, it maintains its growth projection for 2027, when it estimates that the economy will rebound by 2%, unchanged from the July Panel. For next year, regarding the composition of growth, Funcas believes that the contribution of domestic demand will be 2.2 percentage points -one tenth more than in the previous Panel- and the external sector will detract two tenths.
That said, it makes it clear that all components of domestic demand (private consumption, public consumption, and investment) "will register lower growths than those of 2026". The quarter-on-quarter growth rate of GDP would be around 0.5% in the first three quarters and would slow down to 0.4% in the last, these experts add.
Regarding inflation, the estimate for the average annual rate of 2026 rises to 3.4% for the general and 2.9% for the underlying, two tenths more in both cases than expected in July. And for 2027, Funcas has also revised its forecast upwards to 2.5% for the general CPI and 2.6% for the underlying.
On another note, the Panel expects that employment will grow by 2.2% year-on-year in 2026, and by 1.7% in 2027, two tenths more than estimated in July in both cases. Thus, the unemployment rate would stand at an average of 9.9% this year and would drop to 9.6% in 2027.
It is also worth noting that, just like in the July Panel, the consensus expects a rise in the public deficit to 2.5% of GDP this year. In 2027, the negative balance of public accounts would decrease to 2.3%.
"The deterioration of the international context, and its impact on inflation and monetary policy, has caused the one-year Euribor to stand above 3.2%, half a point more than in the previous Panel," these analysts also explain, who expect some moderation in the coming months, so that the Euribor would close the year around 2.7%.
As they say, "in this context, the rise in bond yields reflects the concern of markets about public deficit levels in advanced economies". Therefore, the Panel expects that pressures will persist, and estimates that the yield on the Spanish 10-year bond could approach 3.5% by the end of the forecast period.
