Tourism Fuels Top Economic Performance
The Canary Islands’ economy is set to remain stronger than Spain’s as a whole. While the archipelago’s heavy reliance on tourism is often seen as a drawback, this very factor is driving its key macroeconomic indicators. In terms of Gross Domestic Product (GDP), tourism explains why the Canaries will post the country’s highest economic growth this year, significantly exceeding the national average of 2.9%. Specifically, the region will expand its GDP by 3.5% in 2025 and 2% in 2026 – maintaining its position among the regions with the strongest economic upturn – according to the latest report published by the Savings Banks Foundation (Funcas).
Leading Regions and Pandemic Contrast
The Islands are one of only four regions, alongside the Balearic Islands, Andalusia, and Madrid, where GDP will grow above the average for Spain as a whole. Notably, the Balearics – which are also growing at 3.5% – share this high dependence on tourism. The weight of this business was starkly reflected during the pandemic when borders closed and activity virtually vanished in both of the country’s archipelagos. The GDP of the Canary Islands fell by 18.8% compared to the previous year. However, following the mass return of foreign visitors after the worst of the pandemic had passed, it rebounded to the top positions, alongside the Balearics, with growth of 8.6%.
Meanwhile, the Funcas report links Madrid’s economic strength – with growth of 3.3% – to the development of services such as business support, logistics, and technology. Regions with a strong industrial base like Aragon, Castile and León, Castilla-La Mancha, and La Rioja will also benefit this year from the pull of sectors linked to the European Next Generation funds or renewable energy.
A Paradox of Rankings
The archipelago usually finds itself at the bottom of socioeconomic rankings. In the last positions of the country’s classifications, alongside Andalusia and Extremadura, the Canary Islands typically score lowest in terms of per capita income, wages, productivity, or investment in Research, Development and Innovation (R&D+i). Nevertheless, although it still has a long way to go to reach at least the Spanish average in all these areas, it is striking that it has broken from its usual positions to lead the highest economic growth.
Tourism is one of the major factors responsible for both the low positions in the socioeconomic rankings and the current economic strength. And, although the constant growth of this business is beginning to stabilise, the Canaries will record the country’s highest economic increase of 3.5% at the close of 2025.
Signs of Stabilisation and Sectoral Growth
The growth rate in tourist numbers is now less than half of that recorded last year. The latest data from the Canary Islands Institute of Statistics (Istac) notes that in October of this year, 34,717 more tourists arrived than in the same month of 2024, a figure far lower than the 110,157 additional visitors the Canaries had added between October 2023 and 2024. This means that more foreigners are still arriving on a year-on-year basis, but at more moderate levels that are moving the Islands towards an increasingly stable tourism model with fewer headlines alluding to “record figures” or the “best data since before the pandemic”.
On the other hand, activity in industry is growing modestly – according to the industrial production index – despite the fact that the increase in the number of workers affiliated to the sector is higher than the national average and there is evidence of a commitment to economic diversification. In construction, building permits and public tenders, as well as employment in the sector, justify a relatively strong advance even in a context of a housing crisis and rising land prices.
Outlook for 2026
Regarding forecasts for next year, 2026, the Savings Banks Foundation report predicts a slowdown in all regions. The deceleration in tourism, the moderation of industry, and the exhaustion of European funds will lead to lower growth across the country, where Madrid (2.3%), Andalusia (2.1%), the Balearic Islands (2.1%), the Canary Islands (2%), and Catalonia (2%) will repeat as the top performers. They will also be the only autonomous communities with rates above the national average of 1.9% forecast by the Foundation. Thus, the Canary Islands will become the fourth autonomy with the highest growth.
The reason for this drop in the ranking – though still positive – is the much lower influx of tourists compared to that seen in recent years. At the same time, activity in the construction sector, according to the recent trend in permits and tenders, will continue to grow at a faster rate than the national average. Furthermore, the unemployment rate is expected to stand at 11.7% on an annual average, the best result since 2007.
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