Staff Reporter THE Balearic economy grew by 0.8 percent in the third quarter of the year, a figure which shows the most favourable development since the second quarter of 2002. The Gross Product of the Balearics, however, has shown less growth in 2003 than in 2002. This year the increase has registered 0.7 percent, a decimal point less than twelve months ago and notably less than the growth of 3.3 and 4.2 percent which were achieved in 2001 and 2002, respectively. Maria Marques, director general of the economy, nevertheless confirmed that the coming year will witness the start of economic recovery in the Balearics and reach a growth rate wavering between 1.4 and 1.7 percent. A combination of factors will contribute to this turnaround including a greater influx of tourists, and the improved performance of countries using the Euro currency, especially Germany. This sign of improvement in the Gross Balearic Product is thanks to the economic impetus of the industry and energy sector, which grew by 0.9 percent (compared to 0.4 percent in the second quarter) and the growth of 0.7 percent in the public service sector. However, the downward trend of falling tourist activity continued into the third quarter due to the “apathy” of central European economies and the strong valuation of the Euro, meaning that key client countries such as the United Kingdom can purchase less Euros with their Pounds Sterling. Other influential factors were the growth of competing markets; the proliferation of low cost airline companies; and the use of the Internet which has meant that travellers have had the option of dispensing with the traditional method of booking holiday packages. The Balearic government expressed its concern about continuing falls in takings by hotel owners, which decreased yet again in September by 1.1 percent. This contrasts with the increase experienced by other Spanish regions who compete with the Balearics for income from tourism at a national level. The construction industry is also slowing down, reducing its growth rate between July and September to 1.4 percent, compared to 1.7 percent in the previous quarter. Marques expects however that increased public investment in infrastructure will mean a nasty but salutary shock for the sector in the medium term. Majorca was the island that gave the greatest impetus to growth in the archipelago in the third quarter, with an increase in the Gross Balearic Product of 0.8 percent, the best also since the second quarter of 2002. The positive development can be attributed to dearer electricity for non domestic use; the rise of 6.45 in air passenger traffic; and to a 7.1% upsurge in overnight reservations in tourist accommodation.