Bank of Spain Upgrades Growth Outlook, U.S. Dollar Dips to 11-Week Low

By / / Breaking News

Key Takeaways

  • The Bank of Spain has significantly raised its GDP growth forecasts for 2025 and 2026, with 2025 now projected at 2.9% (up from 2.6%) and 2026 at 2.2% (up from 1.8%).
  • The central bank also revised its 2025 inflation forecast upwards to 2.7% but lowered its 2027 inflation outlook to 1.9%.
  • Spain's debt-to-GDP ratio is expected to decline steadily, reaching 98.3% by the end of 2027.
  • The U.S. Dollar Index (DXY) has fallen to its lowest level in eleven weeks, last trading down 0.4% at 97.875.

The Bank of Spain has issued an optimistic update on the nation's economic prospects, significantly upgrading its GDP growth forecasts for the coming years. The central bank now anticipates Spain's economy to grow by a robust 2.9% in 2025, an increase from its previous forecast of 2.6%. This upward revision is primarily driven by strong domestic consumption and a dynamic services sector. The growth outlook for 2026 has also been raised to 2.2% from 1.8%, with 2027 growth projected at 1.9%. In the near term, the Bank of Spain expects GDP to expand by 0.6%-0.7% in the fourth quarter.

Inflation projections have seen mixed revisions. The Bank of Spain now sees 2025 inflation at 2.7%, a notable increase from the prior 1.7% forecast. However, the inflation forecast for 2027 has been lowered to 1.9% from 2.4%. The central bank maintained its budget deficit forecasts, expecting a deficit of 2.5% of GDP in 2025 and 2.1% in 2026.

Regarding public debt, the Bank of Spain projects a continued decline in the debt-to-GDP ratio. It is expected to reach 100.6% at the end of 2025, further decreasing to 99.1% by the end of 2026 and 98.3% by the end of 2027. This indicates a steady path towards fiscal consolidation.

Meanwhile, the U.S. Dollar Index (DXY) has experienced a significant decline, falling to its lowest level in eleven weeks. The index was last reported down 0.4% at 97.875. This movement reflects broader market dynamics and could have implications for global trade and investment flows.

Disclaimer: This article is for informational purposes only and does not constitute financial advice. We are not financial professionals. The authors and/or site operators may hold positions in the companies or assets mentioned. Always do your own research before making financial decisions.
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