Spain’s Q3 GDP Grows 0.6% Amid Middle East Tensions, Employment Shifts

Spain’s economy expanded by 0.6% in the third quarter, outpacing most major European economies despite ongoing Middle East instability.

Key takeaways

• Growth rate steady: Q3 GDP rose 0.6%, matching the previous quarter and exceeding growth in France and Germany.
• Employment divergence: Public‑sector jobs increased while private‑sector positions fell, a pattern not seen since the pandemic.
• Foreign‑born workers drive net gains: All net job creation came from foreigners or dual nationals, according to the employment survey.
• Native employment drops sharply: Spanish nationals lost roughly 150,000 jobs in the quarter, the steepest decline on record.

Economic performance

Spain reported a 0.6% rise in gross domestic product for the July‑September period, according to the national statistics institute. The figure is comparable to the 0.6% increase recorded in the second quarter and well above the modest growth or contraction reported by other large European economies. France, for example, hovered near recession, raising concerns about debt sustainability and social unrest.

Labor market trends

The quarterly employment survey (EPA) showed overall job growth, but the composition of that growth shifted. Public administration continued to add staff, whereas the private sector shed workers, a reversal of the post‑pandemic trend when private hiring led the recovery. The net increase in employment was entirely attributable to foreign‑born workers and individuals holding dual citizenship.

Impact on native workers

Spanish nationals experienced a loss of about 150,000 jobs during the quarter, the sharpest fall recorded in recent years. Analysts noted the decline as unusual and indicative of a potential cooling in domestic demand.

Why it matters: The data suggest that Spain’s economy can maintain growth despite external shocks, but the sharp drop in native employment and the reliance on foreign labor could signal underlying vulnerabilities that may affect social stability and future policy decisions in the region.