Spain’s economy continues to edge towards its pre-pandemic level after growing by 0.3% in the first quarter.
The Russia-Ukraine war complicates its path of recovery towards recovery but the pace of growth is expected to remain among the fastest in the EU.
Tourism continues to improve strongly in 2022. The country has recovered around 75% of its pre-pandemic international tourists, welcoming 16 million travelers from January through April.
Unemployment fell by nearly 100,000 people in May to 2.9 million, the lowest figure since 2008, according to the State Public Employment Service.
Growing employment and excess savings accumulated during the pandemic are driving consumer spending which is set to rise by 2.2% in 2022 according to Oxford Economics.
However, the impact of surging inflation poses downside risks. After hitting a three-decade record in February, inflation slightly decreased to 8.7% in May but it is set to remain high until at least mid-2023.
The high inflation scenario is accelerating the pace of monetary policy normalisation, which would complicate the prospects for Spain.
European funds could offset the risk of a decrease in investment as Spain will receive up to €140 billion over the coming years as part of the Next Generation EU plan.
Amid the uncertainty, investor appetite for the Spanish real estate market remains high. International capital continues to flow into all real estate sectors but especially into the build-to-rent and hotel sectors.