Valencian AC

• The Valencian Autonomous Community is the region with the fourth highest GDP, accounting for 9.3% of Spain’s total GDP.
• With a little over 5.4 million inhabitants, 10.9% of the national total, it is the region with the fourth largest population.
• GDP per capita (26,453 euros) is 14.6% below the average. Its relative decline over recent years is due to lower economic growth against a backdrop of higher population growth.
• In terms of its sectoral composition, the region is notable for the relative importance of manufactured goods (14.5% vs 11.9% on average) and construction (6.7% vs. 5.9%). However, industry-related services are of lesser importance (27.2% vs. 29.7%), as is agriculture (1.9% vs. 2.7%).
• The region is highly export-oriented: exports of goods account for 27.3% of GDP (25.6% on average in Spain). The region is the fourth largest exporter, with 36.978 billion euros in 2024, 9.6% of all Spanish exports. The main products exported are food (23.9% of the total), above all fruit and pulses, chemical products (13.5%) and products from the motor vehicle industry (13.1%); it accounts for 48% of Spanish exports of construction materials, 31% of footwear and 24% of fruit and pulses. In turn, although tourism activities contribute a high share of GDP, it is less dependent on international tourism than Spain as a whole: in 2024, 54.9% of overnight stays in hotels were by foreign tourists (vs. 63.8%).

The Valencian economy is performing at a similar level to that of the country as a whole. At CaixaBank Research we estimate that Valencia’s GDP grew by 3.0% in 2024 (3.2% in Spain), somewhat lower than originally anticipated due to the impact of the DANA floods, which may have reduced growth by 2 or 3 tenths of a percentage point. Activity was driven by construction and, above all, tourism, explaining the strength of consumption and the labour market.

Our forecasts indicate GDP growth of 2.5% in 2025, slightly above the national average (2.4%). This loss of momentum compared to 2024 is due to the rate of growth of tourism returning to normal and foreign demand being constrained by modest growth in the euro area. In the short term, growth will be hit by the DANA floods, but the investment effort to rebuild and replace the capital that was destroyed - supported by EU funds - will boost growth. Furthermore, the improved financing conditions and easing inflation will continue to support consumption.

Employment is performing well, somewhat better than across the country, with a 2.6% rise in the number of workers affiliated to Social Security in 2024 (2.4% in Spain) and a 2.9% year-on-year rise in May of this year (vs. 2.2%): transportation, construction and healthcare have seen the biggest rises in employment over the last year. Nevertheless, the unemployment rate is slightly above average, at 12.7% in Q1 2025, compared to 11.4%.

Consumption is performing very strongly. The volume of sales of retail and consumer goods rose by 2.6% in 2024, bettering the figures for the whole of Spain (2.1%), and it picked up speed at the start of this year: 2.8% year-on-year up to April vs 2.6%. Meanwhile, it has the highest number of passenger car registrations in the country, with growth of 15.1% in 2024 and an extraordinary 61.2% year-on-year growth in January-May 2025, due to the need to replace the numerous vehicles destroyed by the DANA floods.

However, industrial production is performing worse than it is in Spain as a whole: the IPI fell for the second consecutive year in 2024, hit by poorly performing consumer durables and, above all, capital goods. It was down by 2.9% (0.7% on average nationwide), a trend that has continued this year, with a 1.4% drop year-on-year up to April (vs. –0.3%).

Exports of goods are also performing poorly. In 2024, they fell by 2.7%, (0.2% on average nationally), hit by falling sales of capital goods – especially transport equipment – and products from the motor vehicle industry, which could not be offset by the upturn in food (fruit and pulses) and energy products, whose sales partly recovered after the sharp downturn in the previous year (the regasification plant in Sagunto was adversely affected by prices returning to normal levels). In Q1 2025, the decline stood at 1.8% year-on-year (vs. 2.6%). The tourism sector is suffering from the effects of the DANA floods and its post-pandemic recovery has faltered: according to figures from January-April, total overnight stays fell by 0.1% year-on-year (0.6% in Spain), although foreign tourist arrivals continued to rise (7.1%, in line with the average).