Cyprus, Bulgaria and Spain Grow More Than Three Times Faster Than the Eurozone in Q1 2026

Eurozone growth slowed sharply in the first quarter of 2026, expanding by just 0.1% compared with the previous quarter and 0.8% year on year, according to Eurostat's second estimate published on Wednesday, 13 May 2026 and reported by Euronews. That marks a steep deceleration from the 1.3% annual growth recorded in the fourth quarter of 2025. Yet three economies are pulling away from the bloc: Cyprus (3.0%), Bulgaria (2.9%) and Spain (2.7%) are all growing more than three times faster than the eurozone average.

The European Union as a whole performed slightly better than the currency bloc, adding 0.2% quarter on quarter and 1.0% year on year. Both readings still lag the United States, where GDP grew by 2.7% in annualised terms over the same period. Against that backdrop, a small group of economies is sharply pulling away from the average.

Cyprus tops the table at 3.0%

Cyprus posted the fastest annual expansion among EU members with available first-quarter data — nearly four times the eurozone average. According to the European Commission's forecast, the performance rests on several pillars:

• strong growth in private consumption;
• accelerating investment supported by EU funds;
• a record tourism season, with tourism accounting for about 14% of Cypriot GDP.

The Commission expects Cypriot GDP to grow by 2.6% in 2026 and 2.4% in 2027, markedly above the eurozone average. But pressure on energy markets is testing the economy: annual inflation accelerated from 0.9% in February to 1.5% in March and 3.0% in April, and the number of tourists fell by 30% in March. Public finances remain a bright spot, with a budget surplus of €573.3 million, or 1.5% of GDP, recorded in the first quarter of 2026.

Bulgaria grows 2.9% as it joins the euro

Bulgaria's economy expanded by 2.9% year on year in the first quarter of 2026 — the second-fastest reading in the EU and unchanged from the previous quarter — even as the country joins the euro. The European Commission's forecast envisages real GDP growth of 2.7% in 2026 and 2.1% in 2027, driven by EU funds, defence investment and sustainable private consumption.

Warnings about the quality of that growth are growing louder. IMF Managing Director Kristalina Georgieva has characterised the situation as 'overheated': wages are growing faster than productivity, credit is expanding rapidly and housing prices are skyrocketing. The IMF estimates that switching to the euro could bring Bulgaria's per capita income to the EU average within a decade — but only if budgetary and structural reforms are implemented. According to Eurobank Research analysts, the budget deficit reached 3.5% of GDP in 2025, with expenditures growing by 13–14% against a planned ceiling of 6.2%, and Eurobank warns that personnel costs in particular raise the likelihood of an excessive deficit procedure being launched against Bulgaria starting in 2027.

Spain leads the eurozone heavyweights

Spain's GDP grew by 0.6% quarter on quarter and 2.7% year on year in the first quarter of 2026, according to the Spanish National Statistics Institute (INE) — a slight acceleration from 2.6% in the fourth quarter of 2025 and a clear lead among the four largest eurozone economies. The contrast with the other heavyweights is stark: over the same period Germany added only 0.3% in annual terms, France 1.1% and Italy 0.7%.

BBVA Research estimates that Spain's GDP grew by 2.8% in 2025 and expects growth of 2.4% annually in both 2026 and 2027, attributing the momentum to the absorption of EU funds, sustained immigration and increased defence and infrastructure investment. At the same time, labour productivity has barely grown since 2019, housing supply is still not keeping pace with demand, and government debt is approaching 100% of GDP. Among other larger economies, Hungary recorded the fastest quarterly expansion at 0.8% (1.7% year on year), while Finland delivered a surprise 0.9% quarter-on-quarter gain (1.3% year on year).

Source: Euronews — Which European economies are growing the fastest in 2026