Spain’s economy entered 2026 from a position of strength. But the escalation of the Iran war has abruptly reintroduced a familiar risk: inflation driven by global energy markets.

The government has already moved to contain the shock. Ahead of the Easter travel surge, the government approved a €5 billion relief package, including a cut to fuel taxes, lowering VAT on petrol and diesel to 10% to ease pressure on households.

According to CaixaBank Research, Spain is relatively insulated from direct energy supply shocks due to its limited reliance on Middle Eastern energy and higher share of renewables. Still, economists warn that global price dynamics, especially oil, gas and fertilizers, could feed into inflation and test household resilience in the months ahead.

Furthermore, the prospect of a US naval blockade at the Strait of Hormuz poses a significant risk: Europe’s airline industry has warned that jet fuel supplies could be depleted within three weeks. Any disruption of this scale would likely have knock-on effects for Spain’s tourism sector, which accounts for roughly 13% of GDP.

The result is a two-speed outlook. Growth remains solid, but inflation is back on the table.

Iran war impact: Why Spain is less exposed but not immune

The Iran conflict has triggered global concerns over energy supply disruptions, particularly around the Strait of Hormuz, a critical chokepoint for Middle East exports. The IMF has warned that the war and blockade could slow global growth and raise inflation due to supply disruptions and rising energy costs.

For Spain, the direct exposure is limited. About 10% of its oil and less than 2% of its liquefied natural gas imports pass through Hormuz, significantly lower than many European peers.

This structural advantage, combined with a larger share of renewable energy, reduces the risk of outright supply shortages. CaixaBank Research emphasizes that Spain enters this shock from a “relatively favorable starting point,” supported by strong growth momentum and improved macro fundamentals.

However, insulation is not immunity. Even without supply disruptions, global energy prices are set in international markets. As a result, Spain still faces imported inflation via higher fuel, electricity and transport costs. CaixaBank estimates that if energy prices remain elevated, inflation could approach 3%, above baseline forecasts.

There are also second-order effects. Rising fertilizer and food costs, flagged by Máximo Torero, chief economist at the U. Food and Agriculture Organization (FAO), could add pressure to Spain’s agro-food sector and consumer prices amid broader geopolitical tensions.

Inflation returns as the main macro risk

March data already points to a shift. Spain’s headline inflation rose to 3.3%, up one full percentage point from the previous month, according to Instituto Nacional de Estadística (INE). Without government intervention, including tax cuts on energy, the inflation rate increase would have been closer to 4%, according to CaixaBank Research analysis.

Core inflation (excludes highly volatile items such as food and energy) remains more contained at 2.7%, but economists warn that prolonged energy pressures could spill over into broader prices.

While the data currently aligns with CaixaBank’s baseline scenario, set before the Iran war and projecting inflation moderating to around 2.4% in 2026, that outlook now faces upside risks depending on how energy markets evolve. The key variable is duration—a short-lived energy spike would have a limited macroeconomic impact, while a prolonged conflict could entrench higher inflation expectations across the economy.

Growth holds steady as activity indicators remain resilient

Despite geopolitical turbulence, Spain’s growth engine remains intact. High-frequency indicators suggest that economic activity regained momentum through March after a softer start to the year due to weather disruptions and rail transport issues. Services activity remains in expansion territory, while consumption trends show resilience on a quarterly basis.

CaixaBank Research estimates that GDP grew between 0.4% and 0.5% quarter over quarter in the first-quarter (Q1), consistent with a still dynamic economy. This resilience reflects strong domestic demand, supported by lower interest rates, population growth and EU recovery funds.

If increases in energy costs remain temporary and moderate, CaixaBank Research estimates Spain’s GDP growth for 2026 would be around 2%, down from its pre-Middle East conflict forecast of 2.4%.

Labor market strength continues to underpin the economy

Spain’s labor market remains a key pillar of stability. Social Security affiliation rose by more than 200,000 people in March, slightly above recent historical averages. While growth in employment moderated marginally on a seasonally adjusted basis, the overall trend remains solid.

This labor market strength is critical. It supports consumption and helps buffer households against rising prices, even as inflation pressures re-emerge.

Tourism upside offsets some geopolitical risks

Spain has been benefiting from a “safe haven” effect in tourism, as travelers shift away from destinations perceived as riskier in the Middle East and Eastern Mediterranean. Industry estimates suggest this could generate more than €4 billion in additional tourism revenue in 2026.

However, what has so far looked like a relatively safe bet is now facing fresh headwinds. Potential jet fuel shortages, exacerbated by the risk of a US naval blockade at the Strait of Hormuz, could disrupt airline operations and pressure capacity. Higher energy costs and weaker household consumption may also weigh on travel demand.

While the duration of any disruption remains uncertain, the prospect of price shocks could make summer travelers more cautious.

Outlook: Inflation returns as the key risk

Spain’s economic fundamentals remain solid. Growth is holding up, employment is strong and macro imbalances are far lower than in previous crises.

But the shock from the Iran war is already shifting the outlook. The transmission channel is inflation, not supply. Energy prices, and increasingly food inputs such as fertilizers, will determine how persistent that pressure becomes. Government intervention is buying time. But it does not change the underlying exposure to global markets.

The next key signal will come with Spain’s first-quarter GDP release at the end of April, which will show whether the economy’s strong start to the year is durable as external risks intensify.