Basque Country

• The Basque Country, with 2.2 million inhabitants (4.6% of the total), is the region with the eighth largest population in Spain.
• The region’s total GDP is 87.857 billion euros, representing 5.9% of Spanish GDP, making it the region with the fifth
  highest GDP in the country.
• GDP per capita (39,547 euros) is the second highest in Spain (27.7% higher than the country as a whole). Álava is the province with the second highest GDP per capita in the country, 34.2% above the average.
• The Basque Country’s productive sectors are notable for the relative importance of the manufacturing industry (21.2% of GDP vs. 11.9% on average nationwide), ranked second in the country, behind Navarre AC: it accounts for 10.4% of Spain’s manufacturing output, most notably in the manufacture of machinery, capital goods, metal products and transport equipment. However, the contribution made by services and, above all, agriculture is far below average.
• Due to its strong focus on industry, exports of goods account for a high proportion of regional GDP – 37.2% – almost 12 points above the national average. It has total export sales of 30.963 billion euros (2024), 8.1% of all Spanish exports. The main goods exported are motor vehicles (18.1% of the total) and capital goods, especially industrial machinery (13.0%) and transport equipment (9.6%). The region exports 22% of the country’s industrial machinery, 29% of its tyres and inner tubes and 33% of its iron and steel.

In 2024, the Basque economy was somewhat more sluggish than the Spanish economy as a whole: we estimate that GDP grew by 2.8% (vs. 3.2%). This below-average growth is mainly due to the weakness of industry, which is highly important in the region and was hit by subdued foreign demand. On a positive note, residential construction and services, especially trade, hotels and restaurants, and transportation, performed strongly.

Our forecasts indicate that GDP will grow by 2.4% in 2025 (2.5% in Spain). Thanks to the strong structural positioning of its industry, it is one of the best placed regions to benefit from European funds. Coupled with lower financing costs, we expect investment to drive growth. Meanwhile, easing inflation and interest rate cuts will help to revive consumption. Risk factors include the US tariff policy, which will have a major impact on the region.

The Basque labour market is slightly more sluggish than across the country as a whole. After growing by 1.5% in 2024, almost 1 point below the average, the rise in the number of registered workers affiliated to Social Security began to falter at the start of 2025, growing by 1.0% year-on-year in February, the second lowest rise across all regions (2.4% in Spain). Job creation in transportation, professional activities and education has been outstanding over the last year. Meanwhile, the unemployment rate is among the lowest in the country (8.2% in Q4 2024 vs. 10.6% on average).

The volume of sales of retail and consumer goods shows that household spending has been on a par with the whole of Spain in recent years, growing by 2.4% in 2024 (2.1% on average). In any event, it is yet to return to pre-pandemic levels, as it is currently 0.8% lower than in 2019 (+4.1% in Spain). Passenger car registrations are faring worse, with below-average growth in 2024 (5.6% vs. 7.1%) and, above all, in January-February this year (0.9% year-on-year vs. 8.4%), so it is one of the regions furthest adrift of 2019 levels (–35.1% vs. –18.9%).

Industry in the Basque Country is performing very poorly, hit by sluggish global demand and the decline in the energy sectors, due to prices returning to normal (the region has a refinery). After a sharp decline in the previous year, the IPI failed to recover in 2024 (–0.2% vs. +0.7%) and at the start of 2025, it is markedly lower (–2.8% year-on-year in January vs. –1.0% across the whole of Spain); so it remains far below where it stood in 2019 (–9.9% vs. –3.6% for the country as a whole).

As with industry, Basque exports have suffered a sharp decline, especially last year when they fell by 5.1%, one of the sharpest falls of all regions, while on average the country is experiencing a period of stagnation. While exports of electrical appliances, engines and industrial machinery were strong, sales of transport equipment, motor vehicles and semi-finished goods (iron and steel) fell.