The International Monetary Fund has cut its growth forecast for Spain's economy by two tenths, to 2.1% in 2026 and 1.8% in 2027, due to the Middle East conflict. The organization attributes the adjustment mainly to rising oil and gas prices. It recommends eliminating rent controls and taking stronger action on housing.
The International Monetary Fund (IMF) published conclusions from its Article IV mission on Spain, dated March 20, 2026. It cuts its GDP growth forecast to 2.1% for 2026 (two tenths lower than previously) and 1.8% for 2027, citing the adverse impact of the conflict between the United States, Israel, and Iran. Oil prices have risen over 50%, to about 110 dollars per barrel, and natural gas 98%, to 60 dollars per megawatt hour, after attacks on infrastructure like South Pars in Iran and Ras Laffan in Qatar. Spain mitigates the gas effect thanks to its high share of renewables in the electricity mix, but a prolonged conflict could push inflation above 3% and curb investment and consumption, the IMF warns, led by Kristalina Georgieva. Domestic demand, rising wages, and EU funds will support short-term growth, despite moderating immigration and tourism. Pedro Sánchez's government approved a 5 billion euro package against the energy crisis, with tax cuts and aid, though the IMF advises temporary and targeted measures. On housing, it urges “more contundent action” to boost supply: speed up urban plans, release land, streamline permits, and reform the Land Law. It criticizes rent controls: “Unless a rigorous evaluation refutes the preliminary evidence that rent controls have significantly reduced the rental housing supply, such controls should be suspended after their initial three-year period”. It proposes borrower-based measures (BBM) for mortgages to avoid financial risks, given easing lending criteria. Political fragmentation raises doubts on fiscal reforms and consolidation, with the deficit projected above 2% of GDP in 2031.
