The governor of the Bank of Spain, José Luis Escrivá, predicts economic growth of over 2% for 2025 and 2026, although he warns that the construction sector must increase its pace to cover the deficit of 150,000 homes.
The governor of the Bank of Spain, José Luis Escrivá, stated this Thursday that the Spanish economy will grow at rates above 2% this year and next, and that this trend will remain stable at least until 2028. During a discussion in Tenerife, where he presented the institution's annual report, Escrivá highlighted that domestic consumption remains "robust" and that the savings rate of families is high, which supports internal demand.
Escrivá noted that domestic demand "has room to grow" and that investment continues to rise, with interest rates around 2%, which does not create financing problems. "Economies are holding up well despite the disruption from the Iran war," he stated, adding that Spain is consolidating as a destination for digital nomads. "This is the post-COVID world, the wind is at our back," he commented optimistically.
The construction sector, the weak link
However, Escrivá was critical of the construction sector, which "needs to grow more." He recalled that the sector was "hit" after the financial crisis of 2008, which reduced its size, and now faces a lack of workers and low profitability. "It cannot keep up with the recovery of demand," he lamented, estimating the housing deficit at 150,000 units, with prices rising "at a very high rate" and above citizens' income.
The governor prioritised the development of industrialised construction, which "needs to speed up," but admitted that "the shortcomings are very large." Currently, employment in the sector is lower than in 1999, despite total employment growing at rates above 3%. This situation means that the housing supply cannot keep pace with demand, putting upward pressure on prices.
Lack of public housing and administrative slowness
Escrivá also reproached the lack of public housing stock in Spain, with only one public housing unit for every 65 inhabitants, compared to one for every three in the Netherlands. To improve this situation, he called for better "tuning" between public administrations, as both the central government and the autonomous communities and municipalities "are not agile in generating supply," both in construction and in land availability and granting building permits.
The governor did not overlook that in Spain "it is difficult to delineate levels of competencies" as it is the most decentralised country in the EU, and suggested looking to Denmark and Sweden, the "most efficient" in spending, with "higher institutional quality" and a way of regulating the economy that is "far superior."
The European funds are running out
Regarding the Next Generation funds, Escrivá admitted that "they are running out" and that the upcoming ones "are smaller." Now it is time to analyse whether they have been allocated "correctly" and what their effects have been in attracting private investment in the coming years. The message is clear: European fiscal stimulus is decreasing, and Spain must make the most of the remaining resources to lay the foundations for sustainable growth.
For readers interested in the Spanish economy, Escrivá's forecasts represent a horizon of short-term stability, but with a warning about the need for structural reforms, especially in housing. If construction does not accelerate, rising prices could hinder consumption and the well-being of families. The key will be whether administrations can coordinate to expedite the supply of land and housing, a challenge that the governor himself acknowledges as complex in such a decentralised country.
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