Spain is the only eurozone economy that sees its growth forecasts improve for this year, according to OECD calculations, which on Wednesday released its global outlook report. Specifically, the organization has raised its GDP growth forecast for this year by one tenth compared to March, to 2.2%, the same figure the Government handles. It is almost triple the eurozone average (0.8%) and well above Germany (0.7%), France (0.7%), and Italy (0.5%). “It is balanced growth. The OECD attributes the dynamism to domestic demand, with private consumption supported by strong employment and investment driven by European funds,” the Government values.
Domestic demand is the main factor driving growth
The chief economist of this institution, Stefano Scarpetta, in the press conference held after the presentation, particularly highlighted the good results that migration policy has yielded in Spain, precisely when this issue is the subject of debate among political forces. Scarpetta emphasized how the integration of this group has strengthened the labor market, which has bolstered domestic demand and highlighted the importance not only of regularizing but also of ensuring their full integration into the labor market so they can truly contribute to development.
If the closure of Hormuz is prolonged, the world will grow at a rate that will be half the average of the previous decade
Another element Scarpetta highlighted was the diversification of energy sources, with the boost generated by renewables, which has helped reduce dependence and the rise in the electricity bill. He also acknowledged that “Spain’s exposure to the ongoing conflict in the Middle East is limited,” while the average tariff on Spanish exports to the United States is expected to remain below 15%.
Among the negative notes, the OECD has increased its inflation expectation in Spain, which will reach 3.3% this year. The organization warns that a prolonged conflict in the Middle East could intensify energy disruptions, keeping inflationary pressures high for longer and reducing growth, but also boost tourism in Spain, as travelers opt for destinations considered safer.
Likewise, the institution has again criticized that measures to mitigate high energy prices should be better targeted towards vulnerable social groups (instead of being indiscriminate, as they have been so far) and be temporary to mitigate the social impact of higher energy prices, while limiting fiscal costs.
Finally, while it considers Spain well positioned to take advantage of its strong expansion of renewable energies, the OECD believes that to fully realize these benefits it will be necessary to simplify permit granting processes, accelerate investment in grid infrastructure, and support investment in storage.
Read more Balas points to Gallardo as the creator of the David Sánchez square in the Diputación of Badajoz
In general terms, the OECD considers that the Iran war and the consequent closure of the Strait of Hormuz have dealt a blow to a global economy that before the conflict had shown some resilience. The economic system, they assure, is “under pressure.” Now, in the worst-case scenario contemplated by this institution, economic growth could drop to 2.1 (from 3.4% reached in 2025) and continue its decline to 1.8% in 2027, which would be a rate half the average reached during the last decade. Asia, more dependent on energy from the Persian Gulf, would be the most affected area. It should not be ruled out that in this more adverse scenario some economies enter recession. It is interesting to highlight the case of China, for which the OECD forecasts a steady slowdown over the next two years, far from the high rates of previous years. Specifically, the OECD sets a deceleration phase for China, going from 5.0% growth in 2025 to 4.5% in 2026 and 4.3% in 2027.
The other superpower, the United States, is also heading for a downward cycle. In the reference scenario, it is expected that the increase in energy exports will support US growth and partly offset the drag caused by rising prices on household purchasing power. Growth is expected to moderate from 2.1% in 2025 to 2.0% in 2026 and 1.8% in 2027. The two largest economies on the planet, caught in a reciprocal trade war, are doomed to suffer in the coming months.
While the rising cost of fertilizers threatens to jeopardize food security (especially in African countries, which could see their harvests harmed), the shortage of essential materials for semiconductor production is a shadow looming over the current AI boom. In fact, according to OECD data, the investment plans of major tech companies remain steady this year and next. To give an idea, the capital expenditure announced for next year doubles the levels of 2025. If expectations and expected returns are not met, then the negative consequences could be unpredictable.
On the trade war front, the OECD highlights that tariffs applied by the US, after reaching a maximum tariff of 18% last spring, have now dropped to 10%, thanks also to Supreme Court rulings. However, if the data is put into perspective, it is clear that we have entered an era of protectionism. Nowadays, one in five goods traded worldwide is subject to some restrictive measure (from quotas, tariffs, or regulations), confirming that the world is becoming smaller.
