Published on Tuesday, November 14, 2023

Spain | Madrid Economic Outlook. Second half 2023

BBVA Research forecasts a growth in Madrid's GDP of 3.0% in 2023. Although future prospects deteriorate, the recovery will continue and a growth in GDP of 1.8% is expected in 2024. 160,000 jobs could be created in the 2023-2024 biennium.

Key points

  • Key points:
  • In the third quarter, social security enrollment remained high compared to Spain. Public services, professional or financial activities and the capital goods industry are more resilient.
  • In the last 10 years, Madrid has accumulated a real GDP growth of 11%, doubling the Spanish average.
  • Household consumption in Madrid seems to be stagnating, constrained by high interest rates, which are expected to continue. External demand is also weakening, as shown by data on exports of goods, spending by foreigners or residents in other autonomous communities. The counterbalance is provided by the acceleration of investment, thanks to the support that the NGEU funds or the pent-up demand for transport equipment may be providing.
  • The Community of Madrid seems better placed to face these challenges as it needs less energy than other regions to create added value, the household consumption basket has a lower exposure to goods and services that have risen the most and, above all, the regional debt is in a better position to face the coming years. Although supply problems persist in the residential sector, others, such as tourism and industry, seem to show fewer restrictions than in other regions.
  • It is assumed that the recovery can continue due to the strength of the balance sheet of households and families in Madrid, the support that can be provided by the acceleration in the implementation of European funds and their boost in public works tenders, added to the fact that the regional government has already announced that it will maintain an expansionary fiscal policy also in 2024. Furthermore, the dynamism of the active population continues, greatly favored by migratory flows.

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