The new chief economist of the Bank of Spain, David López Salido, has begun to mark his imprint since his first public interventionthis Tuesday, to present the latest update of the Bank of Spain’s projections. These present a substantial improvement in forecasts of economic development. … Spanish for the coming years so that for this year a growth of 2.9% is expected, for next year 2.2% and 1.9% for 2027, improving by three, four and two tenths the forecasts presented last September and thus aligning them with what is the official government forecast, which also foresees a GDP advance of 2.9% this year and 2.2% for 2026.
The great commitment of José Luis Escriva to modernize the forecasting methodology of the Bank of Spain, signed directly from the Department of Monetary Affairs of the Federal Reserve of the United States after a new selection process, explained this Tuesday this significant upward adjustment of the bank’s economic projections by the accumulation of statistics and economic indicators that point towards an improvement in the economic situation, but also by a somewhat more intangible factor: the incorporation of the analysis of a series of elements of judgment and methodological adjustments which added almost two tenths to the growth forecast for 2026 and a tenth to that for 2027.
“THE Data and the global environment make us more optimistic with the growth of Spain”, said David López Salido, before explaining in detail all the elements that led the institution to improve its vision of the Spanish economy.
The Bank of Spain’s expectations for the future of the Spanish economy are significantly more optimistic. Generally speaking, the institution predicts that Spain will maintain a very vigorous growth rate, higher than the main European economies; that this will be accompanied by a much better than expected employment performance in September; and even a substantial improvement in workers’ salaries, higher than inflation, driven by collective bargaining and by the induced effect that the 4% salary improvement promised to civil servants by 2027 will have on negotiations in the private sector, which is one of the most striking hypotheses that the new Director of the Economy has decided to introduce into the new forecasts.
The bank’s team of analysts also understands that this sharp increase in wages will increase the burden of unit labor costs on companies and, therefore, will limit the improvement in company margins, but without conditioning the expected improvement in investment – which in this case is much more modest than that expected by the government – and without exerting upward pressure on prices, since they estimate that it will be the companies that will absorb part of this impact on their margins.
Robust economic growth will also provide new tax revenues to government coffers and enable them to increase more than spending and facilitate fiscal adjustment. Substantially in 2026, the year in which the Bank of Spain considers that the budgetary consolidation objectives initiated in Brussels by the Government will be achieved, with a reduction to 2.1% of the public deficit and to 101.4% of the public debt; and a little more eventful in 2027, a year in which the sharp increase in salaries promised to civil servants will cause the deficit to quickly rebound to 2.5%, compared to 1.8% promised to the European Commission as part of the structural budgetary adjustment plan.
All this in a context of improving labor productivity, largely thanks to the contribution of the export of non-tourism services and the contribution of intangible assets. The new chief economist of the Bank of Spain says that productivity gains will support wage increases in the years to come, and here he appears even more optimistic than the Ministry of Economy, which in its latest economic situation report warned of the way in which the reduction in working hours was eating into the small productivity gains that were beginning to be observed in the economy.
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