Spain | Regional Economic Outlook. October 2023

Summary

Without significant changes in the regional growth hierarchy in 2023. In 2024, external demand weakens the progress of activity, with a greater impact on the more open regions.

Key points

• Key points:
• A better than anticipated first semester supports the upward revision in 2023 by 0.2 percentage points in Aragón, Castilla y León, and Galicia. In Catalonia and Castilla-La Mancha, the revision is +0.1 pp. However, this progress does not extend to all regions.
• External demand weakens. The effects are already being felt in July's exports and in foreign tourism in the summer season. As a result, growth in the Balearic Islands is revised downwards to 3.0%, but it continues to be the most dynamic region this year.
• The effects of the drought prevent further acceleration in Extremadura and Murcia, whose forecast is maintained, and lead to a downward revision of Andalusia's GDP growth (-0.2 pp).
• In 2024, the generalized worsening of external demand leads to the largest revisions in the northern communities. Even with this conditioning factor, these communities should grow above average in 2024. Overcoming the drought should allow the southern regions to return to average growth.
• The stagnation of tourism activity, due to supply restrictions and weak demand, will limit the progress of activity in the Balearic and Canary Islands, which could show lower growth in 2024.

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