People browse clothes at a stall in El Rastro open-air market in Madrid, Spain September 7, 2025. REUTERS/Ana Beltran

MADRID (Reuters) -Spain's economy expanded at a slightly milder pace of 0.6% in the third quarter from the previous three-month period, when it grew 0.8%, preliminary data from the National Statistics Institute (INE) showed on Wednesday.

Still, Spain has been consistently outpacing its euro zone peers thanks to a booming post-pandemic tourism sector, a strong labour market helped by immigration, European Union funding and cheaper energy.

The third-quarter growth rate, in line with analysts' expectations, was driven by domestic demand, with consumption and investment pulling ahead against a backdrop of geopolitical and trade uncertainty.

"This third-quarter data reinforces the recent upward revisions to the forecasts of the main national and international institutions for 2025, when Spain will once again lead the major advanced economies," the government said in a statement.

It is the ninth consecutive quarter with a GDP growth of 0.6% or higher compared to the previous quarter.

On an annual basis, Spain's third-quarter economic output expanded 2.8%, below the 3.0% growth expected by analysts polled by Reuters.

The INE also revised the annual growth rate for the second quarter to 3.0% from a previous 3.1%.

(Reporting by Joao Manuel Mauricio in Gdansk and Emma Pinedo in Madrid; Editing by David Latona and Andrei Khalip)