{
  "id": 13146937,
  "title": "Bank of Spain lifts growth forecast to 2.6% but warns of housing shortfall and higher energy bills",
  "url": "https://urgent.news/2026/10/09/bank-of-spain-lifts-growth-forecast-to-2-6-but-warns-of-housing",
  "topic": "finance",
  "section": "Finance & Markets",
  "published": "2026-10-09T15:22:47.000Z",
  "source": {
    "name": "Spain in English",
    "slug": "spain-in-english",
    "url": "https://www.spainenglish.com/2026/10/09/bank-of-spain-lifts-growth-forecast-to-2-6-but-warns-of-housing-shortfall-and-higher-energy-bills/"
  },
  "original_language": "en",
  "account": "Spain's economy is projected to expand by 2.6% this year, according to an upgraded forecast from the Bank of Spain. However, the central bank cautions that this growth is being tempered by ongoing housing shortages and surging energy costs. The bank's latest quarterly assessment, released on Friday, raises the 2026 growth projection from 2.3% in June to 2.6%. Improved household spending, employment gains, and immigration-driven population growth have helped sustain the economy despite the Middle East conflict's disruptions.\n\nThe bank also raised its forecast for 2027 from 1.7% to 2.2%, representing a slowdown from this year's growth. However, household consumption is expected to weaken in the coming quarters. Spain is set to hold a snap general election on November 29, with housing affordability and living costs likely to be key election issues. Prime Minister Pedro Sánchez announced the early election on Monday after his minority government could not secure parliamentary approval for measures to address the housing crisis.\n\nA central concern in the bank's assessment is the insufficient pace of new home construction to meet demand, despite higher property prices and improved access to bank financing. The shortfall of 750,000 homes relative to household formation could rise to one million over the next two years, putting upward pressure on housing prices and making it harder for people to rent or buy. Residential investment has grown more modestly than anticipated, hampered by labor shortages, land availability issues, and lengthy planning procedures. Although construction starts increased since 2024, progress slowed in 2026.\n\nApproved projects are taking longer to move into construction, completion rates have weakened, and developers face higher production costs and difficulties connecting to the electricity grid. These obstacles limit the speed at which additional homes can reach the market, with the construction process typically taking around three years. The bank notes that the outlook will heavily depend on whether the labor, planning, and land constraints continue. Publicly funded subsidized housing programs, supported by central government, regional authorities, and municipalities, could provide a stronger boost to residential investment from 2027 onwards.\n\nThe bank also increased its 2026 and 2027 inflation forecasts, projecting annual averages of 3.9% and 3.7%, respectively, both above its June projections by 0.3 and 1.1 percentage points. These estimates are driven by the Middle East conflict's impact on global energy supplies. Higher gas prices are feeding into electricity costs, and Spain's renewable energy generation offers some protection compared to countries like Germany and Italy. However, this protection is strongest in spring, while gas-fired power plants play a greater role in meeting demand during other seasons.\n\nThe conflict's continuation and escalation are creating significant uncertainty and volatility in the global economy, according to the bank. The war in Iran and the closure of the Strait of Hormuz have affected oil and global gas markets. Higher gas prices are also contributing to increased electricity costs. Spain's renewable energy generation provides some protection against these fluctuations compared to countries like Germany and Italy, but this protection is stronger in spring, while gas-fired power plants are more prevalent in other parts of the year. The report warns of continued pressure on energy bills this autumn and winter, with futures-market prices estimating wholesale electricity prices at €141.4 per megawatt-hour and gas prices at €74.2 per megawatt-hour for the fourth quarter. Government tax reductions on electricity, gas, and motor fuels will mitigate some of the impact, providing households with estimated savings between €105 and €264 from these measures.",
  "summary": "Spain’s economy is expected to grow by 2.6% this year, according to an upgraded Bank of Spain forecast, although the central bank warns that stronger activity is being accompanied by persistent housing shortages and rising energy costs. ALSO READ: Spanish government raises 2026 growth forecast to 2.6% despite Middle East... The post Bank of Spain lifts growth forecast to 2.6% but warns of housing…",
  "key_points": [],
  "editors_take": null,
  "illustration": null,
  "coverage": {
    "outlets": 1,
    "also_reported_by": []
  },
  "ai_generated": true,
  "disclaimer": "Summaries, key points and the editor’s take are written by software from other outlets’ reporting and may contain errors — always check the linked original."
}