Spain | Madrid Economic Outlook. First Half of 2024

Summary

The GDP of Madrid could increase by 2.9% in 2024 and 2.1% in 2025, which would allow the creation of 183,000 new jobs in the region over the biennium.

Key points

• Key points:
• In 2023, GDP growth could have been 3.3% (0.8 pp higher than Spain), following a 7.2% increase in 2022. The strong performance of the services sector, both in tourism and other areas, and the strength of employment would have more than compensated for the weakness in industry and goods exports.
• The growth in Social Security affiliation shows significant improvements in recent months, particularly in the city of Madrid and in non-urban areas. Card spending is advancing more in transportation services, accommodation, and bars and restaurants, supported by the strong performance of tourism.
• GDP could increase by 2.9% in 2024 (2.5% in Spain). The European economy is progressively improving. The services sector shows gains in competitiveness, and Madrid is increasing its hotel supply, which could partly mitigate the effects of tourism saturation. Immigration and the increase in the participation rate allow for high job creation. Funds associated with the PRTR will support public investment.
• It is expected that Madrid's GDP will maintain its growth at around 2.1% in 2025 (2.1% in Spain). If these forecasts are met, the region could be the community with the highest GDP growth compared to pre-crisis levels. Additionally, the unemployment rate will decrease to an average of 8.8% in 2025, and 180,000 new jobs could be created by 2025.
• There are some risks: the stagnation of manufacturing may reflect structural problems in the European industry; attracting talent and training the unemployed is key to compensating for the labor shortage; economic policy uncertainty affects investment and housing; demand growth will be limited by fiscal adjustment.

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