Last Tuesday, the INE published the first estimates on the macroeconomic figures of the autonomous communities corresponding to the year 2024. The following day's ARA devoted two pieces: theeditorial (from which I took the title of this article) and another in the Economics section. The first, quite rightly, emphasized that GDP growth—which measures the size of the economy—is not as important as GDP per capita growth—which divides GDP by the population and therefore measures material prosperity. In plain language: GDP is how much we all produce; GDP per capita, how much we touch. Obviously, the important thing is the latter.
Now, those texts made three statements that are worth commenting on to better understand some of the important things happening in Spain.
The first: "The case of the Basque Country is curious, since despite occupying second place on the podium in GDP per capita, it is one of the regions with the lowest GDP growth in 2024." The fact is that, year after year, the Catalan and Spanish authorities celebrate the fact that Catalan and Spanish GDP, respectively, are growing more than in neighboring countries, as if this meant that the economic situation of Catalans and Spaniards is improving. In reality, in Spain, there is no relationship between the two. If we consider the period from 2000 to 2024, there are regions where GDP has grown significantly, but GDP per capita has grown very little (the Balearic Islands), and there are cases where the opposite is true (Castilla y León and Asturias). As for Catalonia, its GDP has grown at the same rate as that of Andalusia and Galicia, but while Galicia's per capita GDP has increased by more than 40% and Andalusia's by 22%, Catalonia's has only increased by 12%. Meanwhile, the per capita GDP of the Basque Country, Andalusia, and Madrid has increased by roughly the same amount, but Madrid's GDP has increased significantly, while the Basque Country's has increased modestly. In short, more (GDP) is not more (GDP per capita). (For those familiar with statistics, we note that the R2 coefficient is equal to 0.034.)
We continue with the next sentence, which is along the same lines: "Perhaps this explains why, while Catalonia is growing like nowhere else in Europe, the widespread discontent that permeates society as a whole is very visible. What good are these figures to someone who can't afford decent housing with stagnant wages?"
We've seen that GDP per capita growth—prosperity—has nothing to do with economic growth, but it does have to do with population growth. However, in this case, more (population) means less (prosperity): the autonomous community where the population has increased the most (the Balearic Islands) is one of those that has experienced the most modest GDP growth. The regions (Asturias, Castile and León, Extremadura, and Galicia) have seen their GDP per capita increase more than any other autonomous community. (Again, for the uninitiated: R2 equals 0.672.)
And what does population have to do with discontent? A lot, because if the population is increasing, it's because immigration is doing so, and if immigration is increasing, it's because low-skilled and low-paid jobs are being created, which is equivalent to saying wages are stagnant. Meanwhile, population growth is pushing up real estate prices. This explains why the "cross-cutting discontent" referred to in the ARA editorial is most acute precisely in the autonomous communities where GDP has grown the most.
Finally, we consider the third sentence: "The push for sectors such as tourism cannot hide the alarming loss of competitiveness compared to Europe or the need to strengthen the industrial sector.".
We've said that there is a very clear relationship between population growth and stagnation in per capita GDP. If we look at the five autonomous communities where high population growth coincides with poor per capita GDP growth—Catalonia, Murcia, Valencia, the Canary Islands, and the Balearic Islands—we see that these are economies specialized in tourism, which leads us to conclude that if their per capita GDP is performing so poorly, other factors are causing this push. Why? Because it is the growth of tourism—and other sectors that rely on low-skilled labor—that is attracting a mass of immigrants, pushing down wages (immigration is the alternative these entrepreneurs have to raise wages) and pushing up housing prices.
In conclusion, the figures stubbornly highlight something we've been trying to ignore: that a country doesn't get rich by serving drinks and organizing parties.
