Spain | Canary Islands Economic Outlook 2024

The GDP of the Canary Islands will increase to 2.6% in 2024 and 1.6% in 2025, which will allow it to create 49,000 new people in the community in those two years.

Key points

• Key points:
• The strong increase in Social Security affiliation, which accelerates in 1Q24, is favored by the boost in tourism, especially in the most touristy areas of the eastern islands. Card spending data show that the improvement in demand comes from an acceleration in the contribution of foreigners, which is concentrated in the services sector.
• GDP could increase by 2.6% in 2024 (Spain 2.1%). The European economy seems to have hit rock bottom and could show progressive improvement during the year. Driven by the arrival of foreigners, hotel occupancy increases in the low season, and yields per available room increase.
• The GDP of the Canary Islands is expected to moderate its growth, and growth is expected to be 1.6% in 2025 (2.0% in Spain). If these forecasts are met, the unemployment rate will be reduced to 14.7% and 49,000 new jobs can be created until 2025.
• The increase in prices in the tourism sector gives rise to a loss of competitiveness, the consequences of which are reflected in a lower flow of tourists from the peninsula. This, in an environment of labor shortage and increasing labor costs, without significant advances in productivity being perceived.
• The lack of investment in recent years, the saturation of the territory and the tourism sector, together with the lack of human capital could represent a drag on the progress of the economy.

Authors

Geographies

Topics

Tags