The Balearics will see their economic growth slow to 2.2% in 2026 and 1.6% in 2027 due to a moderation in spending by non-resident tourists, compared to 3.2% at the end of this year, according to BBVA Research projections.
The Valencian Community (3%), Andalusia (2.5%), Murcia (2.5%) and Madrid (2.7%) will be the regions with the highest economic growth in 2026, as they will grow above the national average, according to projections by BBVA Research, which revised Spain’s gross domestic product (GDP) for this year upwards by one tenth of a percentage point to 2.4%.
According to the report by autonomous communities published on Tuesday, Valencia will continue to benefit from the effects of support measures on investment following the storm. Andalusia, Murcia and Madrid, meanwhile, will grow due to private consumption. In the latter, exports of non-tourism services and investment, especially in intangibles, will be a differentiating factor.
Consumption will therefore continue to support economic growth, although the moderation in non-resident spending is expected to continue to affect tourist regions, with a greater impact on the Canary Islands (2.3%) and the Balearics (2.2%). In addition, slower-than-expected restructuring in industry is hampering recovery in much of the north, especially in regions that are more dependent on the automotive sector, such as Navarra (2.1%), Aragón (2.1%) and Castilla y León (2.0%).
In contrast, greater productive diversification and specialisation in defence goods would allow for progress closer to the average in the rest of the north, Galicia (2.4%), Cantabria (2.3%), Asturias (2.2%) and the Basque Country (2.2%). Catalonia and Castilla-La Mancha (2.4%) would record growth in line with the national average, while La Rioja (2.1%) and Extremadura (2%) — with an export focus less linked to capital or intermediate goods — would show somewhat more moderate progress.
For 2025, BBVA Research revised GDP downwards by 0.1 percentage points to 2.9%, with the Canary Islands and the Balearics among the most dynamic regions, with 3.5% and 3.2%, respectively.
In 2027, GDP growth is expected to moderate to 2% in a context of weaker consumption and tourism.
Despite next year’s moderation, strong investment in housing and exports of goods, together with the recovery of industry - especially the automotive industry - could favour industrial and exporting regions, with Aragón (2.5%) and Navarra (2.5%) among the biggest beneficiaries. However, slower growth in tourism would place the Balearics (1.6%) and the Canary Islands (1.6%) in the lowest growth group.
Andalusia (1.8%), Murcia (1.8%), Castile-La Mancha (1.9%) and Extremadura (1.8%), regions that are more dependent on consumption, could see slightly lower increases, also affected by the adjustment in non-resident spending. The gradual exhaustion of the effects of post-storm aid explains the slightly below-average growth in the Valencian Community (1.9%).
Employment growth will also moderate in 2026, although it will continue to show a favourable trend in the Valencian Community (2.9%), Madrid (2.7%), Andalusia (2.5%) and Castilla-La Mancha (2.5%), which will grow above the national average (2.2%), according to data from BBVA Research. In contrast, the Basque Country (1.1%), Aragon (1.2%) and Asturias (1.3%) would see more limited progress in employment growth.
In 2027, with an average employment growth forecast of 2.1%, Castilla-La Mancha (2.5%), Andalusia (2.4%), Cantabria (2.4%), Navarre (2.3%) and Madrid (2.3%) will be among the regions with the highest increases. In contrast, the Balearics (1.8%), Extremadura (1.6%) and the Basque Country (1.7%) would show more modest increases, in line with weaker tourism and domestic demand. The BBVA research centre expects annual employment growth in Spain, as measured by the Labour Force Survey (EPA), to stand at 2.5% in 2025, with the strongest growth in Asturias (4.3%), La Rioja (4.2%), Madrid (3.4%) and Castilla-La Mancha (3%).