Overview

• Banco de España's 2024 Annual Report emphasizes that uncertainty and financial tightening could each reduce Spain's GDP by up to 0.3 percentage points, surpassing the impact of direct tariff increases.
• The effective U.S. tariff rate on Spanish exports has risen from 3% in 2023 to 12% currently and could reach 18% if reciprocal tariffs are enacted.
• Four trade escalation scenarios were modeled, ranging from moderate tariff increases to a full-scale trade war, with the U.S. economy projected to face the largest negative impacts.
• The report identifies domestic housing market imbalances as a critical issue that could hinder supply and exacerbate social challenges if not addressed decisively.
• Findings from the report will inform a revised macroeconomic forecast to be released on June 10, with growth projections for 2025 likely to fall below the previous 2.7% estimate.