BBVA Upgrades Canary Islands Forecast: Economy to Grow 2.5% in 2026 as Iran War Diverts Tourists

The Canary Islands economy is paradoxically benefiting from one of the most severe geopolitical crises in recent years. The Iran war, which began on February 28, 2026 with strikes on Iranian nuclear facilities, has disrupted roughly 20 percent of global oil supplies passing through the Strait of Hormuz. For the Canaries, however, the crisis primarily means one thing: more tourists.

Why the Canary Islands Benefit from the Iran War

BBVA chief economist Pep Ruiz explained that the previously anticipated slowdown in tourism is being offset by a diversion effect. Travellers who would normally choose Egypt, Turkey, Greece or other Mediterranean destinations are shifting to the Canary Islands, which are perceived as safer and more politically stable.

In previous crises — such as the Arab Spring in 2011 or the Russia-Ukraine war in 2022 — the Canaries benefited from similar redistribution effects. This time, however, the impact is stronger because the Iran war affects the entire eastern Mediterranean.

Record Year 2025 as the Foundation

The upgrade builds on an already strong base. The Canary Islands closed 2025 with GDP growth of 3.4 percent, making them the most dynamic region in Spain — seven tenths above the national average of 2.8 percent. The islands welcomed 18.4 million tourists, and spending per visitor rose by 6.8 percent to a historic high.

The Santa Cruz de Tenerife Chamber of Commerce confirmed these figures, emphasising that domestic consumption also grew robustly at 5 percent. At the same time, Chamber president Santiago Sesé warned that the Canaries must seize this moment to accelerate the transition towards a more sustainable economic model.

Risks: Oil Prices and Inflation

The Iran effect has a downside. Brent crude oil has surged from around 60 to over 100 dollars per barrel since the war began. In the Canary Islands, this has driven fuel prices up by more than 34 percent. Inflation in Spain rose to 3.3 percent in March, and the Canaries are particularly vulnerable as an import-dependent region.

The regional government has already launched an investigation into potential price-fixing among fuel station operators. Deputy President Domínguez wants to determine whether the price increases are genuinely market-driven or the result of coordinated mark-ups.

What This Means for Gran Canaria

Southern Gran Canaria — Maspalomas, Playa del Inglés, Meloneras — is the biggest beneficiary of the tourism boom. Gran Canaria Airport already handled 12.96 million passengers in 2025, and new connections such as the recently announced airBaltic routes to Poland and Belgium are reinforcing the trend.

At the same time, the boom is exacerbating the already strained housing situation. Rental prices continue to climb, and the debate over restricting property purchases by foreigners remains firmly on the political agenda.

BBVA expects the Canary Islands to outperform the Spanish average again in 2027, growing at 2.0 percent rather than the 1.6 percent forecast in January. The precondition is that the Iran war does not escalate further and that oil prices normalise in the medium term.