Spain | Situation and outlook: Spanish, Extremaduran economy and agrifood sector

Summary

The economy of Extremadura maintains solid growth backed by job creation in public services, domestic consumption, and tourist arrivals. The agrifood sector faces challenges due to drops in exports of processed goods, geopolitical pressures, and productivity stagnation.

Key points

• Key points:
• Regional GDP is estimated to have grown by 2.4% in 2025. A slowdown is expected, though growth will remain solid (1.8% in 2026 and 2.2% in 2027). 16,000 jobs would be created over the biennium, sustained by immigration.
• Unprocessed agricultural exports (fruits, cereals) rose by 11.6%, but processed agrifood goods fell by 9.2% due to the decline in olive oil.
• Geopolitical tensions and potential US tariffs pose downside risks, although Extremadura has lower direct trade exposure and lower energy intensity.
• Wages are recovering purchasing power, rising by 3.2% compared to an inflation rate of 2.9%. This, alongside lower interest rates, is boosting consumption and card spending.
• Structural bottlenecks persist: a deficit of new housing, labor shortages in certain sectors, and a generalized stagnation in hourly productivity.

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