Spain: 2026 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Spain

The 2026 Article IV Consultation discusses that the Spanish economy has continued to outperform the euro area, with solid growth expected this year despite the adverse impact from the war in the Middle East. Growth should then gradually ease over the medium term as immigration slows and population aging intensifies. Risks to growth are mainly on the downside, and those to inflation on the upside. Given still strong growth under IMF’s baseline projection, the authorities should accelerate the pace of discretionary consolidation to rebuild fiscal buffers ahead of the looming sharp rise in aging-related spending pressures—starting with discontinuing recent energy support measures, except if a severe scenario materialized, in which case they should be narrowly targeted and not distort energy prices. Deteriorating housing affordability calls for more decisive action to boost housing supply, including faster urban development, reducing legal uncertainty, and streamlined construction permitting procedures. In order to pre-empt a buildup of housing-related financial risks amid rapid house price growth and early signs of easing lending standards, mortgage-related borrower-based measures should be introduced, at least in the form of supervisory guidance, in the coming year.