Prospects look bright for Balearic economy

THE Balearic government has revised its growth predictions for the economy this year, raising it to 3.2 per cent of the gross domestic product (GDP), compared to the prediction of 2.9 per cent made last December. The increase was attributed to the good results obtained in the first months of the year by Lluis Ramis de Ayreflor, the finance minister, who presented the report on the economy for the first quarter of the year yesterday. The report showed a three per cent increase in the GDP between January and March, half a point more than the same period last year.
Ramis de Ayreflor said that the improvement was observed in all the sectors, although it was the service sector (tourism) which performed best, showing that “it is still the driving force of the economy.” Majorca showed the most dynamic growth rhythm, at 3.3 per cent, “the highest since 2002,” the minister said.
Commenting on inflation, the chief risk for the Balearic economy because of its effects on the loss of competitiveness, the minister said that in April it was running at 2.4 per cent a year, similar to the national average, but higher than the European Union average of 1.8 per cent. This, coupled with the recent rise in interest rates and that fact that the Balearics is one of the European regions with the highest level of private debt, does not necessarily present a risk for maintaining current domestic consumption levels, Ramis said. “If price increases are coupled with an improvement in product quality, they do not have to be negative or diminish competitiveness. It would be a step towards better quality tourism. However, if a better product is not involved, then it damages the competitiveness of the Balearics as a tourist destination,” he said. The improvement in the tourist sector was attributed chiefly to a greater diversification.
Ramis said that the number of tourists who arrived by air between November 2006 and March 2007 was more than 1.8 million, 18 per cent more than the previous year. The number of Spanish visitors rose by 21 per cent to 224'000, while there was a 16 per cent increase in German tourists and six per cent in British visitors. The number of jobs in the tourist sector in that period reached a record 59'300.
Growth in construction in the first quarter was 3.9 per cent, the same as last year which, the minister said, could lead to a moderation in the price of housing. Industry and energy grew by 1.5 per cent, which was slightly less than last year.