BBVA Research considers the Balearic Islands, the Canary Islands and Madrid as the three autonomous communities that will lead economic growth in 2024, with forecasts of a rise in Gross Domestic Product (GDP) of around 3% in these three regions, above the national average (2.5%).
In the Regional Observatory for the second quarter of 2024 published this Friday, BBVA Research has revised upwards the growth estimates for this year in almost all autonomous communities.
According to the entity's forecasts, seven regions will grow above the estimate for the country as a whole (2.5%): Balearic Islands, Canary Islands, Community of Madrid, Navarra, Aragon, Castile and Leon and Catalonia.
In the case of Aragon, BBVA Research has raised the estimate by six-tenths of a point, to 2.8%, while the forecast for Castile and Leon has been revised upwards by another six-tenths, to 2.6%, and for Catalonia, it has been increased by half a point, to 2.6%.
Meanwhile, the Valencian Community (+0.4 points), the Region of Murcia (+0.4 points), La Rioja (+0.5 points) and Galicia (+0.4 points) are expected to grow at the same rate as the forecast for Spain as a whole (2.5%).
In contrast, six autonomous communities will grow below the national average: Castile-La Mancha (+0.4 points, to 2.1%), Cantabria (+0.3 points, to 2.3%), Asturias (+0.4 points, to 2.3%), Andalusia (+0.5 points, to 2.2%) and Extremadura (+0.2 points, to 1.9%), which will be the community that will grow the least this year.
The Basque Country is the only region where growth for this year is not revised upwards, given that BBVA Research still does not perceive any signs of acceleration, leaving the forecast for this year at 2.3%.
Lower activity growth in 2025
On the other hand, activity is expected to grow less in 2025 due to the depletion of the momentum of services exports. Growth for the more tourist-oriented regions, such as the Balearic Islands and the Canary Islands, is revised downwards and will grow below average. More specifically, BBVA Research has lowered growth in the Balearic Islands by three-tenths in 2025, to 1.4%, and has cut growth in the Canary Islands by one-tenth, to 1.5%.
The strong increase in investment expected due to lower interest rates and the recovery in foreign sales, supported by sustained global growth and the cyclical improvement in activity in the EU, will shift growth towards the northern regions, most of which will grow faster than Spain. On the other hand, reversing the effects of the drought benefits the south.
Thus, the central-southern regions will grow above the national average, which is forecast at 2.1%: Andalusia will grow by 2.5% (+0.1 points), Castile-La Mancha by 2.7% (+0.2 points), Extremadura by 2.4% (unchanged) and Murcia by 2.7% (+0.1 points).
Most of the industrial regions of the northern half are added to these: Comunidad Foral de Navarra, 2.9% (+0.2 points); Basque Country, 2.5% (+0.2 points); Aragon, 2.4% (+0.2 points); Galicia, 2.83% (+0.1 points); La Rioja, 2.4% (+0.2 points); Cantabria, 2.2% (+0.2 points).
The regions that will grow in line with Spain are Catalonia (2.1%, +0.1 points) and Madrid (2.1%, +0.2 points) and slightly below Valencia (2%, no revision), Castile and Leon (2.0%, +0.2 points) and Asturias (2%, +0.3 points).
Tourism regions lead the way in employment growth
According to the report, the most touristic regions would lead to an increase in employment so far in the second quarter of 2024, in addition to some industrial regions such as Aragon and Castile and Leon. On the other hand, Navarre and the regions most dependent on the agricultural sector are registering smaller increases.
As for employment, BBVA Research expects annual employment growth in Spain to be 2.5% in 2024 and 2.1% in 2025. For 2024, employment growth in the labour force survey is: Andalusia (2.4%), Aragon (1.3%), Asturias (1.9%), Balearic Islands (3.6%), Canary Islands (3.9%), Cantabria (3%), Castile and Leon (1.2%), Castile-La Mancha (1.2%), Catalonia (3%), Extremadura (0.8%), Galicia (1.7%), Madrid (3.1%), Region of Murcia (2.4%), Navarre (2.6%), Basque Country (1.2%), La Rioja (0.4%) and Comunidad Valenciana (2.6%).