The Spanish economy, which is led by local consumption, showed a strong performance during the first quarter of 2025, but the broad power outages on Monday may cast a shadow over growth and limit its rise, according to a report published by Bloomberg.
The GDP increased by 0.6% during the period from January to March compared to the previous quarter, according to official data issued on Tuesday, a performance close to the fourth quarter of 0.7%, and is almost compatible with the expectations of analysts whose views polled.
There was a wide interruption of electricity in most parts of the Iberian Peninsula yesterday morning, which led to the interruption of air traffic in Spain and Portugal and the disruption of public transport, and hospitals were forced to reduce their routine services.
Electricity supplies gradually returned in both countries, starting from Monday evening, but some operations were not resumed this morning.
Inflation is higher than expected
On the other hand, consumer price data showed that inflation in Spain was unexpectedly settled at 2.2% on an annual basis in April, a little higher than the European Central Bank goal of 2%, which surpassed the estimates of intermediate analysts.
A survey of the European Central Bank, which was issued later on Tuesday, revealed that the forecasts of families in the euro area for the next year have jumped to the highest levels in about a year, which increases the challenges in front of price stability in the region.
A positive look despite the risks
According to Bloomberg, Spain was distinguished by being the best economy among the largest countries in the eurozone, as the International Monetary Fund raised its expectations for Spain’s GDP growth to 2.5% during 2025, in a move that did not include any other major economy except Russia.
However, the “Bloomberg Economics” unit warned that the power outage, which also affected Portugal, may lead to a decline of up to 0.5% of the semester gross domestic product, despite expectations to compensate for some losses while gradually recovering the power supply, as the power of electrical generation in Madrid returned on Tuesday morning to about 100%, and urban trains services gradually returned.
Supporting sectors and upcoming challenges
The Spanish economy benefits greatly from the services sector, which goes beyond the tourist prosperity after the Korona pandemic. However, the Spanish Central Bank recently expressed questions about whether Spain could continue to grow at a frequency much faster than its main partners, France and Germany.
Anna Andardi, the economist of Bloomberg Economics, said that the Spanish economy “started the year strongly, but there are indications of slowing the basic momentum,” noting that the recent power outage and the strength of the euro may negatively affect economic activity during the rest of the year, especially in light of the customs escalation from the United States.
Spain in the balance of the euro area
The issuance of Spain’s data coincided with the willingness of France, Germany, Italy and the wider eurozone to announce the growth numbers for the first quarter tomorrow, Wednesday, as France is expected to appear limited by 0.1%, while Germany, Italy and the eurozone are likely to achieve about 0.2%.
On the other hand, Belgium’s GDP registered a growth of 0.4%, while the Irish economy jumped by 3.2%, knowing that Ireland’s economy is usually witnessing severe fluctuations due to its role as a tax base for American multinational companies.
Despite the high unemployment rate in the first quarter, recording the largest quarterly increase since 2013, unemployment is still at its lowest levels in more than 15 years, reaching 11.4% compared to 12.3% a year ago.
In his remarks last week, Spanish Prime Minister Pedro Sanchez said that “the economic situation is very complicated, but when we talk about Spain, the image is very positive,” stressing that Spain “is growing and creating jobs unparalleled in the European Union.”
However, the Bloomberg report indicated that Sanchez is facing internal political challenges, as it does not have a majority in Parliament, and failed to pass the budget of 2024 and 2025, and that his last decision to increase defense spending to 2% of GDP this year has sparked criticism from both allies and opposition.
