Spain’s Regional Competitiveness in 2022: What the Numbers Show
Two years after the Covid outbreak in Spain, the Ukraine war, rising inflation and higher interest rates, and the energy crisis that affected the entire European Union, regional competitiveness across Spain’s 17 autonomous communities did not return to 2019 levels. After a robust rebound in GDP during 2021 and 2022, the overall structural competitiveness of the autonomous communities rose by 4.9 percent in 2022, aligning with the general economic trend. This assessment comes from the VII Report on Regional Competitiveness in Spain produced by the General Council of Economists of Spain. Not every region followed the same pattern, with Extremadura, Andalusia, and the Canary Islands performing more slowly and placing at or near the bottom of the Regional Competitiveness Index. In contrast, the Community of Madrid, the Basque Country, Navarra, and Catalonia consistently rank at the top, while La Rioja and Galicia each gained ground against Aragon and Cantabria respectively.
According to José Carlos Sánchez de la Vega, the report’s technical director, a notable shift has occurred in regional dynamics. He describes a merger of two major blocs due to the polarization of autonomous communities. The four leading regions remain the most developed, with Madrid maintaining a strong position thanks to rapid real GDP growth of 7.2 percent in 2022, high per capita income, and a supportive environment for business start-ups and innovation. The Basque Country secured second place after Navarra, propelled by its vibrant economic activity. While the top tier shows only modest changes beyond the first four regions, Sánchez de la Vega notes that these levels are gradually improving but still do not create a perfectly even distribution across all regions.
Recent revisions indicate that the regions of Andalusia, the Canary Islands, and the Balearic Islands posted the strongest gains in the ICREG rankings last year. Galicia and Extremadura joined this more dynamic group. The drivers behind these improvements include a stronger labor market, upgraded basic infrastructure, and intensified innovation and business climate. In contrast, human capital metrics remained nearly stable compared with the previous year. The report also highlights that La Rioja has been among the least dynamic regions since 2021, while the Principality of Asturias emerges as the sole autonomous community showing limited change in its competitiveness profile.
Competitive region profile
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Economists involved in the study emphasize that regional business success hinges on a multitude of factors. A key point is company size, as the Spanish business landscape is characterized by a large share of micro and small enterprises. Approximately 95.7 percent of firms are micro SMEs with fewer than nine employees, a pattern that Spain shares with many EU member states. Large companies, by contrast, tend to be less vulnerable to shocks similar to those experienced in 2020, more adaptable to new technologies, and often better positioned to attract financing. These dynamics help raise firm efficiency and, in turn, the competitiveness of the regions where they operate.
Despite these trends, Spain’s GDP per capita remains below the European average, reflecting a slower pace of convergence. The average annual GDP per capita growth in Spain lagged 1.3 percentage points behind the EU-27 during the observed period. This gap helped shape a divergence in regional trajectories since 1995, a pattern visible in regional comparisons. By 2007, several regions boasted GDP per capita above the European average, while others fell below the 75 percent threshold. By 2021 the landscape had shifted, with only three autonomous communities above the European average and six below seventy-five percent, underscoring ongoing regional disparities in Spain’s economic development.