Spain | While waiting for the rains, regional growth is rooted in the services sector

Summary

Benefited by falling prices, especially energy ones, and lower interest rates, the Spanish economy is holding up better than expected. The distribution of regional growth is centered on the touristic regions and/or the ones producing high value-added services, which will lead the growth.

Key points

• Key points:
• With a growth in Social Security affiliation that could exceed 1.0% in the first quarter of the year, the Canary Islands and the Balearic Islands would lead GDP growth in 2024 (2.6% and 2.5%, respectively).
• Combining the positive effects of exports of both tourism services and other services, Madrid (2.5%), Valencia (2.2%) and Catalonia (2.1%) join the driving group for GDP this year.
• Only in three northern autonomous regions did the latest data show a differential improvement in activity and exports of goods. The Basque Country (2.3%), Aragon (2.2%) and Galicia (2.1%) could stand out from the other industrial regions and show progress more in line with the average. The remainder will grow below this level.
• For 2025, GDP growth is revised downward. Spain could grow by 2.0%, 0.5points less than forecast three months ago, due to a weaker-than-expected eurozone economy and the prospect of tighter fiscal policy. The distribution of regional growth will also gradually change.
• The greater availability of water in the center-north should extend to the rest of the country and allow the regions with the greatest weight in the agricultural sector to see a strong rebound in activity in 2025. Therefore, Murcia (2.6%), Castile-La Mancha (2.5%), Andalusia and Extremadura (2.4% in both) will grow above average and will be at the forefront in terms of growth.

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