EWP: Spanish Stocks To Benefit From Solid GDP Growth In 2026

Spain's economy is poised for a robust 2026, with GDP growth projected at 2.1%, driven by a mix of structural reforms, demographic tailwinds, and fiscal stimulus. This growth trajectory, while slightly below the 2025 pace of 2.9%, positions Spain as a standout performer in the eurozone. For investors, the iShares MSCI Spain ETF (EWP) offers a compelling vehicle to capitalize on these macroeconomic dynamics while addressing global diversification needs.

Spain's 2026 Growth Drivers: A Tailwind for EWP

Spain's economic momentum in 2026 is underpinned by three key factors. First, the acceleration of European Recovery Plan (NGEU) funds, which will inject €17.5 billion in grants, is expected to contribute 0.6 percentage points to GDP growth. These funds are directed toward infrastructure, green energy, and digital transformation, aligning with EWP's exposure to utilities and industrials. Second, immigration-driven population growth is projected to add 0.5 percentage points to GDP, bolstering private consumption and labor market strength. EWP's heavy weighting in financials-38% of its portfolio-benefits from a dynamic banking sector, with Santander and BBVA accounting for significant holdings. Third, accommodative financial conditions, stemming from rate cuts in 2024 and 2025, are expected to support investment in equipment and services, contributing 0.3 percentage points to growth.

However, challenges persist. U.S. tariffs on European imports and global trade tensions are forecast to subtract 0.1 percentage points from growth, while slower export growth and fiscal tightening outside NGEU funds could temper momentum. Despite these headwinds, Spain's high-value-added services sector-finance, real estate, and professional services-is expected to sustain growth, offering EWP a structural advantage.

EWP's Strategic Positioning: Sector Allocation and Diversification

EWP's portfolio structure reflects Spain's economic DNA. The ETF allocates 38% to financials, 26% to utilities, and 13% to industrials, sectors that are well-aligned with Spain's growth drivers. For instance, the utilities sector benefits from energy transition investments, while industrials gain from NGEU-funded infrastructure projects. Notably, EWP's lack of exposure to technology-a sector overrepresented in U.S. markets-provides diversification benefits for global portfolios. This defensive tilt is particularly valuable in a macroeconomic environment marked by AI-driven volatility and inflationary pressures.

Compared to global benchmarks like the S&P 500, EWP offers a unique value proposition. While U.S. equities remain concentrated in high-growth tech stocks, EWP's focus on European utilities and banking counters cyclical risks. Additionally, Spain's low debt risk premium-its lowest since 2009-enhances its appeal as a safe haven within Europe. For investors seeking to hedge against U.S. market overvaluation, EWP's exposure to a resilient eurozone economy provides a strategic counterbalance.

Global Diversification and Macroeconomic Resilience

Spain's macroeconomic profile in 2026 makes EWP an attractive addition to international portfolios. The country's GDP growth is supported by domestic demand, with household consumption and investment in intangible assets (up 40% since 2019) driving expansion. This contrasts with economies reliant on volatile external demand, reducing EWP's sensitivity to global trade shocks. Furthermore, Spain's labor market-projected to grow by 2% in 2026-ensures sustained wage growth and consumption, reinforcing the ETF's long-term appeal.

From a correlation perspective, EWP's performance is likely to diverge from traditional asset classes. While the S&P 500 and commodities may face inflationary headwinds, EWP's defensive sectors-utilities and financials-are less correlated with cyclical swings. This decoupling is critical in 2026, as investors navigate a landscape of divergent monetary policies and sector-specific risks.

Risks and Considerations

EWP is not without risks. Its non-diversified structure, with top holdings representing a significant portion of assets, exposes it to sector-specific volatility. A slowdown in banking or utilities could disproportionately impact the ETF. Additionally, Spain's reliance on domestic demand makes it vulnerable to inflationary pressures, particularly if wage growth lags behind price increases. Investors must also weigh the potential impact of U.S. tariffs and global trade tensions, which could dampen export-driven sectors.

Conclusion: A Strategic Bet on Spain's Resilience

For investors seeking to harness Spain's 2026 growth while diversifying global portfolios, EWP offers a compelling case. Its alignment with NGEU-driven infrastructure, immigration-fueled consumption, and defensive sector allocations positions it to outperform in a macroeconomic environment marked by uncertainty. While risks exist, the ETF's strategic positioning in a eurozone economy with a strong growth trajectory makes it a worthy consideration for those looking to balance risk and return in 2026.