BBVA Research: Madrid continues as Spain’s Economic Driving Force

29 January 2020 – Expansión

According to forecasts published by BBVA Research, the Spanish economy is still growing, albeit at a slower rate than in recent years. Specifically, GDP in the Community of Madrid is expected to grow by 2.3% this year, well above the average for Spain (1.6%), and once again outperforming Cataluña (1.5%), after taking the lead from it as the fastest-growing economic region last year.

The Spanish capital is pushing ahead of all of the other regions in terms of economic growth, boosted by policies of low taxation and flexible regulation, e.g. the relaxation of commercial opening hours, which have allowed Madrid to create more employment (40% of all jobs generated in Q4 2019 in Spain were in Madrid). As such, migration towards the region has intensified, which has driven up the demand for housing and whereby made rental properties more profitable, attracting more investment.  

Meanwhile, Cataluña is still suffering from the effects of the “procés”. Until 2017, it was the fastest-growing region in Spain, with GDP increases well above average. However, in the last two years, 5,600 companies have left the region (most have moved to the Spanish capital, further boosting economic growth there), investment has been withdrawn and major projects have been abandoned or postponed. BBVA Research expects the region to continue losing weight over the Spanish economy as a whole until next year at least.

Finally, Spain’s other autonomous regions are still one step behind, as has traditionally been the case, with variations between them. The Canary Islands (1.1%), Asturias (1.2%) and the Balearic Islands (1.3%) are the regions forecast to grow by the least in 2020, weighed down by weak tourism in the case of the islands and a lack of new industries in the case of Asturias. The other regions are expected to grow in line with the national average, allowing Madrid to shine.

Original Story: Expansión

Translation/Summary: Carmel Drake