The Spanish economy has started the year 2026 showing remarkable resilience, although the scars of global instability are beginning to become visible in its activity indicators. According to the national accounting data confirmed this Thursday by the National Institute of Statistics (INE), Spain’s Gross Domestic Product (GDP) recorded a growth of 0.6% during the first quarter of the year. While the figure places the country at the forefront of the main economies in the eurozone, the data certifies a loss of momentum compared to the last quarter of the previous year, when the economy advanced at a rate of 0.8%. The difference shows that the exceptional dynamism of 2025 has begun to moderate in an increasingly hostile international environment. Along with the quarterly slowdown, the year-on-year GDP growth stands at 2.7%, one tenth below the close of 2025, which was 2.8% (although one tenth above the evolution of the last quarter of 2025 compared to the same period of 2024, which was 2.6%).
Household consumption, the main pillar of domestic demand, grew by 0.6% quarter-on-quarter, representing a stabilization after a vigorous 2025. This behavior is conditioned by price pressures and greater caution in family spending amid deteriorating economic expectations. Investment — or gross fixed capital formation — showed more modest dynamism of 0.4%, largely supported by intellectual property products and capital goods, but weighed down by residential investment, which has begun to lose pace due to supply shortages and high financing costs.
In the labor market, the positive momentum of recent quarters has begun to show signs of fatigue, with a slowdown in job creation that has been dragging on since November. The unemployment rate rose to 10.8% in the first quarter, and employment has fallen twice as much as last year, according to data published this week by the Active Population Survey (EPA). This change in employment trend, which until now had acted as the main buffer of the economy, suggests that companies have begun to adjust their workforces due to falling order books and rising production costs, especially in the industry and construction sectors.
The primary cause of the slowdown is the outbreak of the armed conflict in Iran at the end of February, an event that the Bank of Spain describes as a shock of “especially high” uncertainty. The direct attack on Iranian territory on February 28 abruptly altered the geopolitical landscape, provoking an immediate and violent reaction in energy markets. The de facto closure of the Strait of Hormuz, a vital artery through which approximately 20% of the world trade in crude oil and liquefied natural gas passes, has driven oil prices up by 50% and natural gas prices by more than 60% in just two months.
This energy shock has acted as a hidden tax on activity and is beginning to increase production costs for Spanish companies. Qualitative indicators already reflect this discomfort; the Bank of Spain’s business activity survey shows a slight contraction in turnover and a decline in productive investment in this first quarter, after almost two years of uninterrupted increases. The destabilization of financial markets, with declines in major stock indices and a rise in sovereign bond yields, has tightened financing conditions, adding pressure on an external sector that was already showing signs of weakness in goods exports.
Read more The trunk of memories: 30 objects that explain the history of EL PAÍS
