Spain Foreign Direct Investment (EUR bn)

Momentum should be weakening in the current quarter, after the economy expanded at a soft clip in Q4, weighed down by notable contractions in consumer spending and fixed investment. The unemployment rate rose for the second consecutive month in February, highlighting cooling labor market dynamics. Moreover, in January, industrial production contracted and sequential retail sales growth slowed further, signaling constrained consumer spending amid soaring core inflation—which reached a record high in February. On the other hand, in February, the services PMI moved further into expansionary terrain, and the manufacturing PMI signaled expansion for the first time in eight months. In politics, the government recently approved a controversial pension reform, entirely funded by higher social security contributions and unlikely to guarantee financial sustainability.