Spain | Canary Islands Economic Outlook 2022

The Canary Islands' GDP could grow by 9.6% in 2022 and 5.7% in 2023. The control of the pandemic, the use of savings saved by Canarian families, the boost in the execution of European funds (NGEU) and unused productive capacity will favour recovery. Ukraine's invasion will have a negative effect.

Key points

• Key points:
• The delay in the recovery of tourism and employment, affected by mobility restrictions and the pandemic justify why the Canary Islands did not achieve a positive differential with respect to Spain for the year as a whole, despite the recovery of domestic and peninsular tourism.
• From the summer of 2021 onwards, the Canarian economy accelerated sharply. The strong recovery was only slightly slowed by the upturn in the pandemic associated with Delta and Omicron, and this trend continues into the beginning of 2022. Driven by tourism and expansionary fiscal policy, consumption also accelerated in the second half of the year.
• The conflict between Russia and Ukraine has put a downward bias on growth forecasts, only partially offset by the improved development of the pandemic. Risks associated with higher inflation, central banks' response and geopolitical risks are starting to gain importance. In addition, the implementation of NGEU-related funds needs to be accelerated. In the medium term, the bias will depend on the reforms to be adopted in the coming months.
• If these forecasts are met, the Canarian economy could create 121,000 jobs in the two-year period.

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