Spain | Regional Economic Outlook. June 2024

In 2024, strength of employment and services exports, maintain dynamism in Madrid, the Mediterranean and the islands. In 2025, tourism will lose momentum. Higher European demand and the end of the drought will shift growth to regions with more industrial and agricultural relevance.

Key points

• Key points:
• Upward revision of the 2024 GDP growth forecast for Spain from 2.1% to 2.5%. The improvement is explained by the excellent performance of service exports, the increase in the active population and the support of the NGEU funds.
• Growth will be higher in the Autonomous Regions with a greater weight of the tourism sector or with high value-added services: the Balearic Islands (+0.5pp revision), Madrid (+0.4 pp) and the Canary Islands (+0.3pp) will lead GDP growth in 2024. Some of the largest upward revisions are in regions where goods exports are starting to pull such as Navarra (+0.8pp), Castilla y León (+0.6pp), Aragón (+0.6pp).
• In 2025, with tourism at the limit of capacity in high season, services exports will lose momentum. The Balearic and Canary Islands could show lower gains than the country as a whole.
• In contrast, the cyclical recovery in the Eurozone is expected to gain traction and support goods exports. With revisions higher or in line with the average, most industrial communities could grow above the national aggregate, with Navarra and the Basque Country standing out. The improvement in exports should also benefit Catalonia and Madrid, where it could partly offset the slowdown in tourism and allow for growth in line with the average.
• The gradual normalization of the weather situation should allow the regions with more weight of the agricultural sector a strong rebound in 2025. Thus, Murcia, La Mancha, Andalusia and Extremadura will grow above average and will be among the few regions that will experience an acceleration of activity in 2025.

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