Spain | Regional Economic Outlook. March 2025

Summary

Tourism and consumption continue to drive growth toward the Mediterranean and the islands in 2025, but the prospect of a slowdown persists toward 2026 in a context of high uncertainty that delays the acceleration of export-producing regions.

Key points

• Key points:
• In 2025, the Spanish economy will maintain solid growth (2.8%). The strength of private consumption and tourism services exports explain the improvement and its territorial distribution. The Balearic Islands, the Canary Islands, Catalonia, and Madrid will be part of the most dynamic group.
• The lower weight of services, the sluggishness of goods exports (pending changes in European fiscal policy), and fiscal consolidation are hampering the growth of the northern autonomous communities and Extremadura.
• The economic impact of the Dana (October storm), both in Valencia and the rest of Spain, has been lower than expected a few months ago.
• In 2026 (Spain, 1.8%), a slower boost from tourism and public consumption is expected. The fall in interest rates, along with the need for new housing and fiscal measures to support those affected by the pandemic, will boost Madrid, Cantabria, Navarre, the Basque Country, and the Valencian Community.
• External risks, due to the stagnation of the eurozone and US tariff policy. Internal risks, due to investment that has not yet responded to GDP growth, the lack of housing, aging, and the high unemployment rate. And high economic policy uncertainty due to the lack of consensus in Europe, Spain, and many autonomous communities.

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