THE Centre for Economic Investigation (CRE) warned yesterday of a “stagnation” in the recovery of the Balearic economy, saying that encouraging signs of improved business earlier in 2010 had “gone cold” in the final quarter of the year. The CRE findings have led it to predict an economic growth in 2011 in the Balearics of no more than 0.5 percent.

The CRE is made up of specialists from the Balearic University (UIB) and the Sa Nostra savings bank. Its Director, Antoni Riera, said yesterday during its 10th annual presentation of economic results that if the loss of momentum in regional recovery continues, there will be high numbers of people registered as unemployed over a long period of time. Riera said that the results from the last quarter of 2010 suggest that the Balearic economy has postponed its recovery and that “fresh difficulties” have been added to already-existing weaknesses in production and industry.

According to the CRE report, 64 percent of economic activity in the Balearic Islands studied during the last three months of 2010 registered year-on-year growth below the national average.

Riera pointed to how consumer confidence fell in the last quarter of the year in contrast to earlier in 2010 when it appeared to be recovering.
The Director claimed that in order to boost industry and jobs, the Balearic government needs to promote the sectors of Research and Development, and Innovation. He explained that R&D will provide stability in the regional economy if it is considered as a central “pillar” and allowed to correct what he described as the “structural difficulties” inherent in local production.

Riera said that the employment that a consolidated R&D industry would offer, could help offset the more immediate problems created by the economic crisis such as the threat of having a section of the population without any foreseeable hope of securing work.

He said that R&D is the only alternative which guarantees the Balearics an escape from the long term prospect of not being able to hold its own against competing international markets, from low salaries and low growth.

Riera said that although political turmoil in oil producing North African countries might mean growth in tourism this year, the Islands need to have a stable economic alternative which is not dependent on the fragility of markets.