BALEARIC APATHY HITS THE ECONOMY

He nevertheless, highlighted the fact that there were some positive growth trends, such as in investment, in levels of private consumption, and in external client markets where “signs of resurgence” in demand for Balearic products have been welcomed.

According to predictions by the CRE, the “Sa Nostra” banking group, and by the Balearic University, the Gross Balearic Product (PIB) grew by 1.3 percent in the first quarter of the year, a growth substantially lower than the Spanish national average (2.8 percent). Riera particularly attributed this under par figure to the lack of “enthusiasm” and a “slower pace” in the public services sector.

In his assessment of the tourist sector, Riera pointed out that there has been growth in the number of tourists to the Islands, especially those from Germany and mainland Spain which have counterbalanced the falling numbers of British, Italians and French. This increase in volume of trade has had positive repercussions in the hotel industry and business sector; Riera referred to the average growth of 7.1% in the Hotel Earnings Index for January to April this year.

Nevertheless, he emphasised that in spite of the growth in the number of tourists, bookings in hotel establishments have been on the low side in the first four months of 2004. April was a particularly poor month when the Easter holidays failed to galvanise the industry into action.

The director again gave prominence to the fact that there are some indicators which point to economic recovery. He quoted the example of levels of private consumption which rose by 2 points during the first quarter, thereby growing 1.3 percent in respect of the same period last year.

Riera nevertheless warned that the “poor tourist season” could put a damper on this trend, since early signs of spending by Balearic residents suggest a slowing down in the second quarter for this very reason.

The Economic Research Centre had also read positive signals in investment trends which showed a growth of 1.5 percent from January to March: 2 points more than in the fourth quarter of last year and quite some distance away from the negative results which hallmarked the previous year.

In spite of these, and other positive signals, Riera judged that the fragile, but hopeful growth in Balearic economic activity had been brought to a tentative halt by a sluggish performance in the public services sector. The situation, viewed the director, was a direct result of the uncertainty surrounding the foreign tourist market.