Funcas improves its GDP forecast to 2.9% for 2025, but warns that the housing crisis is beginning to slow down the economy

The Spanish economy will grow at a good pace in 2025but that momentum seems difficult to maintain in the coming years. The latest macroeconomic forecasts from Funcas, published this Wednesday, point to a GDP advance of 2.9% this yearbut to a slowdown to 1.9% next year to stop at 1.7% in 2027. In this slowdown in growth, the housing crisis, which is beginning to affect immigration, has an increasingly important weight.

Funcas, study center of the old savings banks, has significantly improved its growth forecasts in line with what the main analysis organizations have done. The fundamental reason is the recent update in the GDP data undertaken by the INE, which has notably improved the starting point for 2025. Thus, Funcas increases the growth expected for this year by six tenths and the expected growth for 2026 by another three, which remains at 1.9%.

For Raymond Torres, director of Economic Situation at Funcas, the growth profile seen now is “less balanced” than in previous years, with a negative effect from the foreign sector and a clear slowdown. However, Spain still remains one of the advanced economies that will grow the most this year.

In the organization they have identified three factors that make them think of a slowdown. The first is the fall of tourismwhere exports are beginning to suffer. The second is a lower public investment as the effect of European recovery funds runs out. And finally, there appears slowdown in private consumptionwhich in the coming years will be practically the only engine that the Spanish economy will be able to hold on to.

This last chapter is where the housing crisis begins to be noticed. The expected slowdown in consumption is explained, in part, by a lower rate of arrivals of immigrants who are beginning to have problems finding housing. Funcas’ forecasts speak of a 19% drop in the number of arrivals of foreigners of working age in the period 2025-2027 compared to the previous triennium. Foreign labor has been a key factor in recent years of economic growth.

“The housing crisis is having an impact and will have an even greater impact on the entry of foreign workers”Torres pointed out. In addition, lower labor mobility is also observed within Spain, which could also be related to problems finding housing in areas where more job opportunities exist.