Political fragmentation, sluggish productivity and housing: the main challenges facing Spain’s economy in 2025, says Esade
On a global scale, growth will climb to 3.3%, albeit unevenly: 1.9% in advanced economies and 4.2% in emerging economies. The euro zone will grow by 1% – higher than in 2024, but without achieving its potential due to geopolitical uncertainty, core inflation and an ageing population
Thursday, March 6, 2025. Three major structural challenges threaten the long-term growth and competitiveness of Spain’s economy: political fragmentation, which hinders decision-making and the implementation of structural reforms in such key areas as investment, the job market and the qualification of human capital; sluggish productivity, which has strayed increasingly from average European efficiency and competitiveness, with the gap in productivity per hour worked since 2008 now standing at 10%-15%; and the housing crisis that affects both the accessibility and stability of the real estate market and directly impacts social well-being and job mobility. These are some of the findings published in the Esade Economic and Financial Report edited by Toni Roldán, director of EsadeEcPol, and drafted with the support of Banco Sabadell. The chapter about the state of the economy is by Josep M. Comajuncosa, professor at Esade, and Manuel Hidalgo, professor at Pablo de Olavide University and senior fellow at EsadeEcPol.
Another challenge is high public borrowing: gradual reductions remain insufficient. Despite the downward tendency of recent months, borrowing levels continue to restrict the Government’s ability to implement counter-cyclical fiscal measures and also increase the economy’s vulnerability to possible external shocks – yet another challenge facing Spain’s economic stability.
Despite these threats, the report’s authors forecast GDP growth of 2.5% in 2025, followed (according to IMF estimates) by growth of 1.9% in 2026 and 1.7% in 2027, figures higher than those of other advanced economies. This growth will be driven by domestic demand – mainly private-sector spending – and an upturn in investment fostered by NextGenerationEU funds. Lower inflation and higher employment are also expected, albeit at a slower pace than in previous quarters. Inflation of about 2.1% is expected for 2025, possibly higher due to geopolitical tensions and changes in economic policy, whilst unemployment could fall to below 10% in 2027.
Uneven global growth
The Esade Economic and Financial Report underlines that the world’s global economy showed strong growth in 2024 driven by the leadership of the United States and the stabilization of China. Global growth of 3.3% is anticipated for 2025 but with considerable variations: advanced economies will grow by 1.9% and emerging economies, by 4.2%.
The United States will grow by 2.7% thanks to their robust job market and favorable financial conditions. Growth in the eurozone will be 1%, with a slight upturn in domestic demand driven by rising real wages and monetary easing. This growth will, however, fail to reach its potential due to uncertainty, core inflation and an ageing population. Differences within the eurozone will be considerable too with Germany growing by just 0.3%, and France and Italy by some 0.8% and 0.7% respectively. Spain, Portugal and Greece on the other hand will grow by more than 2%, with the United Kingdom climbing to 1.6%.
As regards emerging economies, growth in China is expected to stabilize at 4.6%, underpinned by stimulus policies to offset the weakness of the real estate sector. India’s growth will slow to 6.5%, whilst Latin America will grow between 2.4% and 2.5%. In this region, Mexico and Brazil will chalk up growth rates of 1.4% and 2.2% respectively, with Argentina bouncing back strongly after the recession with a growth rate of more than 4.5%.
Uneven deflation
Global economic growth will also be hit by the deflation that began in 2023. Although core inflation is expected to persist in the services sector in early 2025 due to wage pressure, it will tend to fall as variations in production shrink. In advanced economies, inflation will be around 2%, although in the United States and Canada it will reach 2.2% and 2.4%, respectively. Emerging economies on the other hand will average inflation of 6%, with substantial differences: inflation in China will be 1.7%, in India, 6.5%, and in Argentina and Venezuela rates will hit 60% and 70%, respectively.
The 36th edition of the Esade Economic and Financial Report entitled “Housing: a key challenge for the coming years” and drafted with the support of Banco Sabadell, includes contributions by Joan Monras, research advisor at the Federal Reserve Bank in San Francisco and professor of economics at Universidad Pompeu Fabra, with the article “Mercado de la vivienda: la tormenta perfecta” (The housing market: the perfect storm); José María Raya, chair of TecnoCampus (UPF) and the author of “El nuevo mercado del alquiler: Nuevas fórmulas, viejos objetivos” (The new rental market: new ways, old goals); and Cristina Barceló and Laura Crespo, of the Bank of Spain, with “La tenencia de vivienda y deuda hipotecaria de las familias españolas durante los últimos veinte años” (Home ownership and mortgages amongst Spanish families over the last 20 years). The professor of economics at Esade and board member of the Esade Alumni Real Estate Club, Jordi Fabregat, ended the discussion section with his paper “Alternativas al residencial tradicional. Efecto sobre la demanda de vivienda” (Alternatives to traditional housing: impact on housing demand).
You may also be interested in
La Universitat Ramon Llull i Càritas Barcelona han organitzat una jornada per analitzar les causes i els efectes de l’exclusió social de la gent gran a Espanya i compartir bones practiques
L’exposició “Montserrat 1.000 anys: aportacions a la cultura catalana” es podrà visitar fins al 15 de maig a l’Espai Zero de la Biblioteca de Catalunya
Esade has achieved scope 1 and 2 carbon neutrality thanks to its strategy of reducing emissions, with particular emphasis on solar panels and green energy