BBVA Predicts Spanish Economy Nearing Critical Turning Point

According to BBVA's research division, the Spanish economy is expected to move toward stabilization during the second quarter of this year. This projection stems from several contributing factors: a slower pace of fiscal adjustment measures, resilience shown by export sectors, and easing pressures within financial markets.

The bank's most recent analytical bulletin indicates that quarterly GDP performance between April and June will likely range from a contraction of 0.3% to flat growth of 0.0%. This forecast aligns with their broader annual prediction of approximately 1.4% economic decline for the full year.

Furthermore, BBVA Research anticipates that domestic demand will continue showing reduced rates of decline during this quarter, while merchandise exports will demonstrate durability despite weaker demand from European trading partners.

The analysis also highlights that household consumption recorded positive growth during the initial phase of the April-June period.

Additional observations note that stable industrial confidence readings between April and May, combined with robust export performance, suggest potentially improved conditions for investment in machinery and equipment sectors.

Regarding employment conditions, the research emphasizes that diminished weakness in overall economic activity has contributed to a deceleration in labor market deterioration. As a result, unemployment figures are projected to remain essentially stagnant for a second consecutive quarter.

BBVA Research estimates that Social Security enrollment will decline by approximately 0.4% during the second quarter, after adjusting for calendar-related effects.

However, the analysis raises concerns about potential shortfalls in meeting fiscal consolidation targets for 2025. The bank advocates for prompt replacement of temporary measures implemented last year and urges implementation of necessary actions to fulfill established commitments.