Important factors such as its insularity, the distance from the European continent and the lack of raw materials constitute important disadvantages for the development of the Canary Islands’ economy. In order to compensate for these drawbacks, the Canary Islands enjoy a special economic and fiscal regime, which contains particular regulations about the VAT or its free zone characteristics, among other specific normative.
In 2017, the gross domestic product (GDP) of the Canary Islands was €44,503m, doubling the numbers in the late 90s and making it the eighth Spanish economy (Eurostat, 2019). At a slower rate, the GDP in purchasing power standard (PPS) per inhabitant has been growing till 22.700 in 2017, staying below the national and EU average, 27,600 and 30.000, respectively (Eurostat, 2019). The gross value added (GVA) in Canary Islands is structured as follows: the primary sector accounts for 1.4%, industry and construction are responsible for 7.9% and 5.8% of the total, respectively, while services dominate the economy with a share of 84.9% (Eurostat, 2019). In spite of being an agricultural society not long ago, the primary sector barely has any weight nowadays. Banana, tomato and cucumber are the three main products while tobacco production is entirely for exporting. Farming and forestry are even less important. The industry and construction do not have a big impact either, although the latter is showing signs of recovery. Thus, the economy of Canary Islands relies in the service sector, especially in those activities related to tourism (Instituto Canario de Estadística – ISTAC, 2019).
In 2018, the unemployment rate in Canary Islands was 20.1%, comprising 225,300 people. The figures show an improvement in the last years yet it is rather above the national and EU averages of 15.3% and 6.9%, respectively.
The Canary business network consists largely of freelances and SMEs. This is mainly motivated by the low risk approach of the regional entrepreneurs and the difficulty to attract companies due to the cumbersome bureaucracy, the low production and the lack of qualified professionals in several areas. Nonetheless, the environment expected for the Canary Islands in the coming years is rather positive, as the GDP is forecasted to experience constant grow, confirming the turnaround of the economy while job creation and business are expected to flourish.