Spain’s National Statistics Institute (INE) has updated its GDP growth forecast for 2024 to 3.5%, up from an earlier estimate of 3.2%. At the same time, the GDP growth for 2023 has been adjusted downwards to 2.5%, down from 2.7%. The growth figure for 2022 has been slightly increased to 6.4% from 6.2%. In 2024, Spain’s economy stands out as one of the few strong performers in Europe. While Germany and France face economic challenges, Spain is looking at a brighter outlook. Germany is struggling with a manufacturing recession, and France is experiencing weak domestic demand, even with some boost from the Olympics.

Positive Revision Highlights Economic Strength

Raising Spain’s 2024 GDP growth forecast to 3.5% reinforces the strong economic situation seen last year. This strength is notable, especially when compared to the difficulties Germany and France have faced. For us, this update confirms what we already knew, without presenting new market-shifting news for late 2025. On a more recent note, Spain’s growth in Q2 2025 reached a solid 0.6%, but this suggests a slowdown compared to last year’s pace. On the other hand, Germany’s manufacturing PMI has recently moved above 50 for the second month in a row, indicating that their downturn may have ended. This change alters last year’s stark differences in economic performance. Given these developments, bullish bets on the IBEX 35 might not offer as much value now as they did a year ago. We believe implied volatility on IBEX options could be undervalued, especially with the uncertain outlook for 2026. Traders may think about using strategies like selling cash-secured puts during dips, expecting the strong foundation in 2024 to support the market.

Difference Between Spanish And German Bonds

The gap between Spanish and German 10-year government bonds, which narrowed significantly through 2024 and early 2025, now seems to have stabilized. In July 2025, this gap reached a multi-year low of about 85 basis points. Further tightening is unlikely without new factors, making it a good time for positions that expect the spread to remain stable. The tourism industry, a major contributor to last year’s success, reported record arrivals for summer 2025, although spending growth is slowing. Spanish banks, such as BBVA and Santander, continue to thrive due to the European Central Bank keeping rates steady over the summer. Their stock performance may now be more influenced by overall European rate policies rather than just domestic economic growth. Create your live VT Markets account and start trading now.

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