Spain | Canary Islands Economic Outlook 2025

Summary

In 2024, The GPD of the Canary Islands could have grown by 3.7%, and is expected to increase by 3.4% in 2025 and 1.7% in 2026. This strength is due to the robust performance of the services sector, particularly in tourism, as well as the domestic demand, where consumer spending has been increasing its weight.

Key points

• Key points:
• If these forecasts are met, regional GDP in 2026 would exhibit a 12 pp increase compared to 2019 level. Furthermore, the unemployment rate could fall to 11.5% on average in 2026 and 37,000 new jobs could be created in the 2025-2026 biennium.
• Employment growth was concentrated in Lanzarote, Fuerteventura, El Hierro, La Gomera and La Palma, although Tenerife and Gran Canaria generated the largest number of jobs.
• Lack of investment, particularly in the housing market, is a bottleneck to growth. Rising labor costs may slow job creation. Aging restricts the contribution of household consumption, slows labor market participation and increases dependence on immigration which is concentrated in low-productivity jobs.
• Tourism faces concerns related to stagnating European demand, as well as possible changes in German fiscal policy and the impact of potential US tariff increases, changes in energy costs and general economic policy uncertainty.

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