Recession comes to an end, says Chamber

by Staff Reporter
THE economy in the Balearics “is showing signs of touching rock bottom” during the first six months of 2003, according to a report by the Chambers of Commerce of Majorca, Ibiza and Formentera, which says that the growth of the Gross Product in the Balearics is now at 0.1 per cent. The Chamber of Commerce estimates that this upturn in events crystallized during the first six months of the year. It brings to an end a period which had its beginnings in 2002, when, according to the calculations of the Chamber, a drop of 0.4 per cent in overall standard of living in the Balearics was registered. It is their view that the explanation for this moderate growth level is rooted in “the perceptible growth in construction running concurrent to a slight drop in the tourist sector”. The interpretation placed on the current performance of the most important economic activity in the Balearics, signals that growth in income in the hotel sector coincides with a light improvement in recent influx of tourists. In its analysis, the Chamber of Commerce highlights the services sector showing a decrease of 0.1 per cent, while industry shows growth of 0.5 per cent and construction is seen to be raising its levels of activity by 1.5 per cent. Referring to initial data interpretation, the report points to the fact that although the growth of commerce, transport and other non-tourist-related services is situated at 0.8 per cent, it does not compensate for the fall in economic output experienced in the tourist sector. With regard to agriculture, the Chamber of Commerce comments that “with a nominal upsurge of 0.2 per cent in the Balearics Gross Product, not only is it showing worse movement in 2003, but the sector is also in open structural crisis and its continued deterioration threatens the social fabric of the Balearics.” A slowing down in demand for consumer goods is detected of 1.2 per cent. There is a drop in the number of car owners applying for vehicle registration and a 1 per cent decrease in investment. This scenario is further compounded by poorer export performance. The work place has registered falls in employment levels in the agricultural and construction sectors, and more people have applied for unemployment benefit than last year. Official research made on statistics of the working population in the Balearics reflects that during the first six months of 2003, the unemployment figures levelled off at 12 per cent, whilst in the same period of 2002, they were at 9 per cent. Nevertheless, the number of people in work continues to grow due to the rise in numbers of the working immigrant population.
With regard to inflation, this was at 2.7 per cent in May of this year following the increase in prices of 4.5 per cent registered in 2002.
But the report of the Chamber of Commerce concludes that “perspectives for the year 2003 are still not all that favourable.”