Canary Islands

• The Canary Islands have 2.24 million inhabitants, 4.6% of the total, and it is the Spanish region with the seventh largest population. It is one of the autonomous communities that has seen the strongest population growth over the last two decades and it is among the youngest regions: only 17.9% of the population is over the age of 65 (20.4% on average).
• The GDP of the Canary Islands (49.021 billion euros) accounts for 3.6% of Spanish GDP, the eighth highest of all regions.
• GDP per capita (22,303 euros) is the third lowest in the country and 20.8% below the national average. The region has been falling further behind the average, due to strong population growth coupled with a less buoyant economy.
• The Canary Islands’ sectoral composition is highly dependent on the tourism sector, which is reflected in the importance of trade, transportation, hotels and restaurants, and leisure (37.8% of GDP vs. 28.4% in Spain); the public sector also plays a key role (21.7% vs. 17.8%). However, the manufacturing industry is of far lesser importance (3.0% vs. 12.5%).
• Reflecting the less prominent role played by industry, exports of goods account for the smallest proportion of GDP of all the regions (6.7%); more than 55% are energy products – fuel for aircraft and ships. Exports of tourism services are particularly important for the Canary Islands: in 2023, foreign tourists spent over 20.300 billion euros in the region, 19% of their total spending throughout Spain, and tourism’s direct and indirect contribution to the Canary Islands’ GDP stands at around 35%.

The Canary Islands’ economy has proven to be highly resilient following the pandemic. At CaixaBank Research, we expect 3.3% GDP growth in 2024 (2.8% in Spain), the highest in the country. The upturn in tourism is boosting job creation and consumer spending.

For 2025, our forecasts indicate that GDP growth will slow down to 2.6%, but will remain above average (2.3%). Although it will loose steam after a few record-breaking years, tourism will continue to be the main driver of activity; moreover, geopolitical uncertainty and armed conflicts such as that in the Middle East may make Spain as a whole, and the Canary Islands in particular, more attractive destinations than other competitors. We also expect the disbursement of European funds to be stepped up, which will boost productive investment and economic activity.

The Canary Islands’ labour market is among the best-performing in the country, with average growth in the number of registered workers affiliated to Social Security standing at 4.3% in 2023 (2.7% on average in Spain) and up by 3.2% year-on-year in September this year (vs. 2.3%), primarily thanks to the jobs created in administrative activities, healthcare and hotels and restaurants. As for the unemployment rate, it is one of the highest in Spain; it stood at 13.9% in Q2 2024 (vs. 11.3%).

Following the shock caused by the pandemic, tourist activity is recovering strongly, especially in terms of foreign tourist arrivals and spending, which in 2023 were well above 2019 levels; however, total overnight stays (domestic and foreign) lagged somewhat behind. In January-August this year, foreign tourist arrivals to the islands grew by 10.3% year-on-year, up to almost 9.9 million, and spending rose by 14.4% to nearly 15 billion euros. Compared to the same period in 2019, the gap is 13.7% and 33.4%, respectively.

The recovery of tourism and strong performance of employment have had a positive impact on consumption in recent years, allowing it to withstand the price pressures. Thus, the volume of retail trade sales grew by 5.3% in 2023 and a further 5.3% year-on-year in January-August this year, far higher than the figures recorded across Spain (2.9% and 1.6%, respectively).

As regards the Canary Islands’ industrial sector, this remains extremely buoyant, above average for the country, although it accounts for a very small proportion of its productive sector. After a remarkable 6.0% growth in 2023, the highest of all the regions and in stark contrast to the decline seen across the country as a whole (–1.4%), industrial production has slowed in 2024 and recorded a 3.3% year-on-year increase up to August, although this figure is well above the average for Spain (0.4%).