Spain | Regional Economic Outlook. October 2026

The Spanish economy will grow by 2.6% in 2026, led by Madrid, the south-center, and the Valencian Community. In 2027, growth will moderate to 2.1%, with a recovery of the northern industrial regions and a slowdown in the Mediterranean and the islands.

Key points

• Key points:
• The Valencian Community (2.9%), Madrid, Andalusia, and Murcia (2.8%) will lead growth in 2026, supported by domestic demand, services, and investment. In 2027, the recovery of industrial exports will especially favor the Basque Country and Navarre (2.4%).
• Job creation, partially driven by immigration and its regularization, along with improved household income and wealth, will continue to support private consumption. However, inflation and more expensive financing will progressively moderate its growth, with a greater impact in the south-center.
• Non-tourist service exports will especially benefit Madrid and Catalonia, while tourist saturation, higher prices, and the recovery of competing destinations will limit the growth of the Canary Islands and the Balearic Islands.
• Higher energy costs and weak European demand will especially penalize the northern industrial regions, such as Asturias, Navarre, La Rioja, and the Basque Country, due to their greater exposure to goods exports and energy costs. In contrast, Madrid, Andalusia, and the islands present lower relative vulnerability, while Aragon and Castile and Leon show greater resilience thanks to the dynamism of their exports.
• Housing shortages, electricity grid congestion, and an aging population represent growing obstacles. Against these, the adoption of artificial intelligence, immigration, and productivity improvements offer opportunities to sustain growth in the medium term.

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