Why Are Spain and Portugal Growing Faster Than the Eurozone?
Spain and Portugal are leading economic growth in the eurozone, expanding much faster than their European neighbours. Strong domestic spending, active industries, and tourism have helped their economies stand out.
In the last quarter of 2025, both countries’ economies grew by 0.8%, more than double the eurozone average of 0.3%, according to preliminary data from Eurostat. Spain saw its fastest quarterly growth in a year, with GDP rising 0.8% compared to the previous three months. This was an improvement from the 0.6% growth in the third quarter and slightly above expectations.
For the whole of 2025, Spain’s economy grew by 2.8%, well above the eurozone average of 1.5%. It also outpaced larger economies such as Germany, which grew by only 0.4%, and France, which expanded by 1.1%.
Domestic demand is driving Spain’s growth. Household spending increased by 1.0% in the quarter, while business investment grew 1.7%. Public spending was mostly stable, rising only 0.1%. The tourism sector remains important, helping Spanish services grow by 0.8%. Construction also contributed, with output up 2.1%. Lower energy prices and slower inflation have supported consumer confidence, encouraging people to spend more.
Portugal’s economy also expanded by 0.8% in the final quarter, matching its performance from the previous quarter and beating forecasts of 0.5%. Over the year, Portugal grew by 1.9%, slightly below 2024’s 2.1% but still well above the eurozone average.
Unlike Spain, Portugal’s growth relied more on trade. A significant drop in imports, especially petroleum products, helped balance weaker domestic demand and boosted overall economic output.
Across the eurozone, growth remains uneven. The currency bloc recorded 0.3% growth in the last quarter, the same as the previous three months and slightly above expectations of 0.2%. Lithuania recorded the fastest growth among countries with available data, expanding 1.7% in the quarter, followed by Spain and Portugal. Ireland was the only country to see its economy shrink, contracting 0.6% over the same period.
For the year, the eurozone economy grew 1.5%, up from 0.9% in 2024, but European Commission forecasts suggest growth will slow to 1.2% in 2026. Among major economies, Germany grew 0.3% in the last quarter, Italy also rose 0.3%, and France increased 0.2%, held back by weaker investment.
Despite mixed growth, the labour market remains strong. The eurozone unemployment rate fell to 6.2% in December, its lowest since early 2008, down from 6.3% in November and the same time last year. Youth unemployment also improved slightly, dropping to 14.3%. In the wider EU, the jobless rate stayed steady at 5.9%, with 10.8 million unemployed in the euro area by year-end, a small decline from November.
In short, Spain and Portugal are outpacing their European neighbours thanks to strong domestic spending, tourism, and trade improvements. Meanwhile, the eurozone shows slower and uneven growth, but its job market continues to strengthen.
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