Tenerife's Economy: an expat perspective

The local economy has to be an important factor for anyone considering a move, or living in Tenerife.  A healthy economy means that there will be more opportunities to work and earn an income.  It means that the environment around us will be well maintained and infrastructure will be improved.  Lastly, a healthy economy means that our assets, such as property, will continue to grow in value.

Although Tenerife is an advanced western economy, it has got to this point in a relatively short space of time.  Because of this, there are many types of company that do not even exist yet, and this provides many opportunities for expatriates.  We are accustomed to a very wide range of goods and services at our disposal, and where these do not exist, the gap provides a potential opportunity for an entrepreneur to fill.  This diversification of industry has been the powerhouse underlying Tenerife’s economic growth. 

It is not surprising to know that the biggest industry on the island is tourism, comprising 29.9% of the Gross Domestic Product.  However, although it has had a fairly steady growth trend, providing an increasing income almost every year, its share of Tenerife’s total revenue has been shrinking because other areas have been growing faster.  Back in 2001, tourism was 39.2% of GDP, almost 10% more than now. 

One important area of growth, and more recent decline, has been in the construction industry, which has been Tenerife’s second largest revenue earner.  Many new houses and apartments have been built, especially in the south of the island.  The thousands of new homes have spawned many new industries and caused the growth of many others.  Furniture, décor, home improvement, cleaning, renewable energy, home improvements, satellite TV … hundreds of companies have felt the positive effects of the construction boom.  But with all these new homes come new occupants, whether they are residents, semi-residents or tourists, they need to get about, eat, shop, enjoy themselves, and this has created another boom in businesses that supply services to meet the demand.  As more companies have formed to service all these new demands, so have the companies that serve them, such as Lawyers, Accountants, Gestorias, office suppliers and many other business to business services from computing to couriers.  And of course, with all this economic activity, the need for insurance companies, banks and other financial services has exploded.  Expanding populations also need increased infrastructure: telephones, roads, hospitals, electricity, water .... the list is almost endless.  All of these companies earn an income that contributes towards the island’s Gross Domestic Product.  With each passing year, the range of companies grows as new niches are found and developed, and the GDP grows.

The Tenerife economy is a highly dynamic one, and has been further vitalised by government initiatives and tax concessions that have lured international companies to set up shop here.  Europe is Tenerife’s largest trading partner, but international trade has expanded, particularly with Africa.  New initiatives, such as the creation of the African communications hub and considerable efforts to attract companies from North America are poised to deliver enormous dividends in the coming years.  Santa Cruz has become one of Spain’s busiest ports, moving enormous amounts of goods from Asia to the European Union as well as transatlantic traffic. 

Within the larger Tenerife economy, there is a British sub-economy.  Like the rest of the island, the larger part of this is focused at the tourist industry.  There are hundreds of bars, restaurants, excursion companies, timeshare companies and shops that are owned by and employ almost exclusively British staff.  Diversification in this sub-economy is also the trend, as the number of residents increases.  From home improvement to publishing, the services available to English speakers in their own language have gone from strength to strength.  Many companies that might have started with the aim to service this community have expanded and also serve the Spanish market: and these particularly have prospered. There is undoubtedly enormous room in local economy for further expansion, and each new person that moves here brings with them experience, knowledge and skills that can contribute to it.