The Canary Islands closed out 2023 with results that exceeded expectations, primarily attributed to the resurgence of tourism and service activities, according to the Socioeconomic Situation Report from the Canary Islands Confederation of Employers (CCE) at the end of the previous year.
The report highlights that AENA’s latest statistics confirm a robust recovery in tourism in the Canary Islands for 2023. The archipelago welcomed 14,170,762 foreign visitors, representing a 12.1% increase (1,532,166 more visitors) compared to 2022. The demand for accommodation also exhibited an increase of over 7% across all hotels and flats, albeit the data extends only until November. Employment figures from the Social Security system also indicate growth in sectors closely linked to tourism.
The positive performance in tourism has not only stimulated job growth but also led to an increase in the number of employees in sectors such as hotels, catering, and commerce, with gains of 6.3% and 2.8%, respectively, resulting in a total of 14,237 new employees.
The report attributes the dynamics in job creation in the Canary Islands over the past year to the increase in employment in these sectors, as well as in healthcare, which witnessed the addition of 5,150 new affiliates.
In December 2023, Social Security enrollment in the Canary Islands rose by 4.2%, equating to 36,351 additional workers compared to the same month in 2022. Additionally, registered unemployment decreased by 8.36% (15,315 fewer unemployed individuals) in the Canary Islands and by 4.59% (130,197 fewer unemployed) across Spain in the last year.
However, the CCE cautions that despite the increase in employment, the Canary Islands’ economy maintains a fragile growth rate. GDP data for the third quarter of 2023 reveals zero growth in the islands’ economy during that period. Projections indicate that the Canary Islands’ economy is expected to grow at a very moderate rate of approximately 2% in 2024, nearly half the growth estimated to close out 2023 at +3.9%.
Regarding prices, the report references the latest CPI data for December, indicating that inflation in the Canary Islands increased by 0.1% per month, surpassing the national average, which saw no change during that month.
In the Canary Islands, goods and services related to ‘Housing’ increased by 0.9%, four-tenths of a percentage point more than in Spain as a whole (+0.5%). This occurred in a scenario where the electricity bill increased by 2.5% in the archipelago and by 1.3% nationwide in December.
Prices of groups closely associated with service activities in the archipelago also witnessed more significant increases, particularly in the ‘Restaurants and hotels’ category (+0.5% Canary Islands; +0.2% nationally). In year-on-year terms, the Canary Islands closed 2023 with a CPI increase of 3.8%, seven-tenths of a percentage point higher than the national average of 3.1%.
The report concludes that international economic activity continues to experience a significant deceleration, and although tourism provides substantial support to productive activity and employment in the Canary Islands, the region is unlikely to be exempt from the uncertainty surrounding the European economy. This uncertainty is compounded by the political instability in Spain following the start of the new legislative period.
In light of these challenges, the report recommends measures to ensure the competitiveness of the productive sector, including the reduction of tax burdens, given the already high levels borne by families and businesses. Additionally, it suggests adapting labor costs to the uncertain economic environment, avoiding measures such as the minimum wage increase agreed upon outside of social dialogue, which could lead to losses or even the closure of many companies in specific sectors and regions, especially impacting SMEs and self-employed individuals.
