Spain’s Economy Outpaces Eurozone Amid US Tariff Pressures

• Spain posts 0.7% GDP growth in Q2 2025
• Second-best performance in eurozone, behind Croatia
• Year-on-year growth of 2.8%, above the US (2.1%)
• Exports down 0.5% in eurozone due to tariff war
• Spain records highest employment growth (+0.7%)

Introduction

The European economy has entered turbulent waters following the escalation of trade tensions with the United States. As tariffs begin to take effect, Eurostat data reveals a slowdown across the eurozone. However, Spain stands out as one of the strongest performers, posting the second-best growth rate in the eurozone in the second quarter of 2025.

(Source: Eurostat, INE Spain)

Eurozone Growth Stalls as Tariffs Take Hold

According to Eurostat, the eurozone economy grew by only 0.1% in Q2 2025, a sharp slowdown compared to 0.6% in the first quarter. Year-on-year, GDP rose by 1.5%, lagging behind the United States’ 2.1%. The primary cause of this slowdown is the trade war with the US, which has begun to impact exports across Europe.

• Exports fell by 0.5% across the eurozone.
• Imports remained stable, reflecting the negative balance.
• Public consumption was the main contributor to growth.

Spain Shows Remarkable Resilience

In this challenging context, Spain’s GDP grew by 0.7% in Q2, outperforming most major European economies.

• Spain’s growth was higher than France (0.3%), the Netherlands (0.1%), and significantly above Germany (-0.3%) and Italy (-0.1%).
• Only Croatia exceeded Spain, with 1.2% growth.

Year-on-year, Spain’s GDP rose 2.8%, surpassing even the United States’ 2.1% growth. This performance underscores Spain’s resilience and its increasingly strategic position in the eurozone economy.

The US Factor

The United States economy rebounded strongly in Q2 with 0.8% quarterly growth, up from a -0.1% decline at the start of the year. However, analysts expect this momentum to slow in the coming quarters, as employment figures show the first job losses since 2021. The Federal Reserve may consider rate cuts to stabilize the economy.

Spain’s economy, therefore, finds itself in a favorable comparative position: nearly matching the US quarter-on-quarter and outperforming it annually.

Employment: A Mixed Picture for Spain

While Spain has become a growth leader, its labor market reveals a more complex picture.

• Spain posted the highest employment growth in the eurozone (+0.7%) compared to just 0.1% for the bloc.
• However, Spain also continues to grapple with high unemployment levels, leaving significant room for labor market improvement.

Across the eurozone, employment reached 171.6 million, with nearly 220 million employed in the EU, the highest figure on record.

Outlook and Implications

Spain’s solid economic growth reflects both domestic resilience and effective policy measures. However, external risks remain high:

• Global trade tensions may further dampen exports.
• Unemployment continues to weigh on long-term sustainability.
• European dependence on public spending could hinder private-sector dynamism.

Nevertheless, Spain’s outperformance offers a positive outlook for investors, businesses, and policymakers. With growth well above the eurozone average, Spain is positioned as a leading economic driver in Southern Europe.

Conclusion

Despite headwinds from the trade war and slowing eurozone momentum, Spain stands out as a success story, combining solid GDP growth with rising employment. For investors and observers, Spain’s economy demonstrates both opportunities and challenges in the evolving European economic landscape.