IMF Staff Country Reports

The 2025 Article IV Consultation highlights that the Spanish economy has been performing strongly, supported by services exports and labor force growth. Growth is expected to remain significantly above the euro area average in the near term, before slowing gradually as its recent drivers normalize and demographic aging intensifies. Most risks are to the downside, including from a further escalation of trade measures and domestic political fragmentation. The authorities should seize the growth momentum to more swiftly rebuild fiscal space and reduce sovereign debt risks through a clearer consolidation strategy grounded in well identified tax increase and spending reduction priorities. Additional measures should also be taken to address fiscal pressures from rising future pension expenditures, and to improve the pension system’s safeguard clause. Raising productivity is key to boosting income per capita gains, which have been modest since the pandemic. This should be achieved through a new wave of reforms to facilitate firms’ scaling-up and strengthen innovation.