Spain should avoid recession but growth will slow

Significance

Spain has outperformed other EU economies thanks to a resurgence in demand for tourism, with spending close to 2019 levels, and its relatively limited direct exposure to the economic fallout of the war in Ukraine. However, the deteriorating international outlook now threatens near-term prospects.

Impacts

• Polls suggest that the centre-right opposition People’s Party will win the next election.
• Uncertainty about economic policy will rise ahead of next year’s election.
• Algerian gas could become more expensive or difficult to obtain over the coming years as a result of tensions between Spain and Algeria.
• Madrid will likely seek to make it easier for legal migrants, especially those from Latin America, to work and live in Spain.