BALEARIC ECONOMY STILL STRUGGLING

THE Balearic economy may have grown 0.95 per cent in the second quarter of the year according to predictions made by the Centre for Economic Research (CRE). This institution, created by the “Sa Nostra” savings bank and the University of the Balearics (UIB), is directed by Antoni Riera.
Riera reported yesterday that evidence pointed to a growth of nearly one per cent in the Islands' economy for the second quarter of the year.
The director of the CRE's report also made a detailed analysis of the economic data of the Islands during the first three months of the year in which the Gross Product for the Balearics grew 0.7 per cent. “The first months of 2003 show a slight improvement in the prospects of the Balearic economy. It is essential to observe this upward trend with caution”, warned Riera. He pointed out that this development has emerged after detecting a “significant fall” in the growth of the Gross Product of the Balearics, 0.3 per cent, during the second quarter of 2002. Since then, the progressive growth of the wealth of the Islands has been gradually rising to reach the figure of 0.7 per cent registered for the period January-March of the present fiscal year. Riera appealed for prudence when analysing these “modest growth estimates” viewed in the context of the world economy: “The instability of the economy of the United States, the weakness of the situation in Japan, the slowness of the economic recuperation of Europe, and above all the recession in Germany”, he emphasized. Riera believes that the reasons for this moderate growth are rooted in the fact that private consumption has grown between January and March at the same pace as production in the Balearics, i.e. 0.7 per cent. Another perspective of the report reveals that due to falling demand, exports decreased by 47 per cent in the first quarter.
Complimentary services (bars, restaurants, entertainment) grew by a tenth less than the Gross Product in the Balearics, 0.6 per cent; construction registered a growth rate of 1.3 per cent, and industry contributed 0.8 per cent towards the Balearic economy.

Riera also pointed to the change of trend in tourism. He cautioned that although there was a larger influx of visitors to the Islands, some 6.1 per cent greater during the first five months of the year in Majorca, this does not ensure the tourist sector's profitability which also depends on tourist spending.

With respect to the job market, the Centre for Economic Research has documented that for the first time since 1994, there was a “small” number of redundancies in the first quarter of 2003. Although 0.2 per cent less jobs were registered, Riera attributed this figure to momentary setbacks because from January to May a growth of 0.3 per cent in jobs secured in the marketplace was recorded.

Nevertheless, in the first three months of the year, the growth in unemployment was 12.8 per cent, a figure somewhat inferior to the growth in the second quarter when 13.7 per cent was documented.