Palma.—According to the BBVA report, the Balearic economy will contract by 0.4 percent this year but is forecast to post a growth of 1.4 percent in the coming year.

The BBVA report claims that the Balearic economy is in better condition than any other regional economy to return to growth quickly and that there are definitely green shoots on the horizon.

What has saved the Balearic economy is tourism and with this year forecast to be another positive one, BBVA experts maintain that while the economy will contract again, the contraction will be minimal in comparison to the rest of the country.

BBVA stressed the importance of tourism to the Balearics.
Having posted three years of continual growth in the number of foreign tourists, the Balearic economy is now on the eve of making a significant recovery, despite the domestic holiday market having let the industry down.

And, it appears that Spain as a whole may be about to turn the corner after having slipped into recession in the early part of 2008. Spain's economy will grow and register net job creation in 2014, Spanish Business Council for Competitiveness, or CEC, executive director Fernando Casado said yesterday.

The CEC is projecting gross domestic product (GDP) growth of 0.80 percent in Spain next year, a figure at the mid-point of the range of projections from international financial institutions, such as the World Bank, while the government is forecasting growth of 0.50 percent, Casado said.

Growth will be led by the automotive, biotechnology, aerospace, information technology, machinery, agri-food, tourism, infrastructure, culture and insurance industries, he said.

Casado presented the report along with Inter-American Development Bank, or IDB, chief economist Jose Juan Ruiz, who backed the projections and said Spain was not going through “a destruction of the economy” but an “employment crisis.” Since 2008, when the global financial crisis started, Spain's GDP has contracted about 5 percent, a figure that is not alarming when compared to the economic meltdowns suffered by different Latin American countries in the past, Ruiz said.

Spain, however, has lost jobs, with about 20 percent job destruction registered since 2008, the economist said.
The unemployment rate in Spain has historically been around 8 percent and now stands at 27 percent, Ruiz said.
Spain will “get out” of its economic downturn, the IDB economist said.
The economic situation in Spain is the result of problems in certain industries, such as construction, that were affected by the end of the “real estate boom,“ Ruiz said, adding that the country cannot “continue with this model” because it “does not lead to sustainable growth” and creates only an “unstable situation.” Casado and Ruiz said 2014 would be a key year for Spain in moving toward a new and more flexible economic model.