Spain's economy keeps growing despite Europe's decline in Q1 due to Iran war

The conflict in the Middle East has brought the EU's economic growth to a screeching halt. In the first quarter of 2026, the eurozone's GDP contracted by 0.2% and the EU's by 0.1%, while Spain's grew by 0.6%, according to data Eurostat published on Friday.

Labour market dynamism and energy diversification, with less dependence on fossil fuels thanks to the investment in renewables, have contributed to the resilience of the Spanish economy.

The decline in Europe as a whole also contrasts with the data from the fourth quarter of 2025, where GDP had risen by an average of 0.2% in both the eurozone and the EU.

The OECD (Organisation for Economic Co-operation and Development) said on Thursday that Spain was less exposed to the energy shock stemming from the war in Iran. Eurostat data confirms that, while Europe faces an economic contraction caused by rising energy prices, Spain continues to grow.

However, although Spain is growing faster than the European average, it ranks eighth in GDP growth, below Denmark (1.9%), Estonia (1.1%), Malta (1.1%), Finland (0.9%), Hungary (0.8%), Bulgaria (0.7%) and Slovenia (0.7%).

At the same time, the major economies of the eurozone, such as Germany, France and Italy, remain stagnant. French GDP contracted by 0.1%, while German and Italian GDPs advanced a modest 0.3% during the first quarter.

The contraction of the eurozone economy is the first since the end of 2022, when GDP fell by 0.1%, and the largest since the second quarter of 2020, when activity plummeted due to the Covid-19 pandemic's lockdowns.

Ireland suffered the largest GDP decline among European countries, with a 12.1% drop in the first quarter.

Compared to Lithuania, which experienced the second-largest GDP decline (0.3%), the collapse of the Irish economy was striking.

The presence in Ireland of technology and pharmaceutical companies like Apple, Google, Meta and Pfizer has a significant impact on the Irish GDP, as these large companies report a portion of their global profits there. This adds instability to the statistics and the country's growth rates are often highly distorted.