Joan Collins BALEARIC exports are recovering due to the recuperation of the world economy, led by the countries in the European Union, who are increasing sales in the principal production sectors. During the first four months of 2006, the increase in comparison with the same period of 2005 was 7.9 percent, reaching a total of 100.4 million euros, according to figures from the Institute of Exterior Commerce (Icex). This positive development, in spite of the possible negative effect of the euro to dollar exchange rate, is generating a climate of better confidence at company level because of higher spending registered by consumers in Britain, France, Germany, Scandinavia, Italy and the rest of the central European countries. The comparison between exports since the year 2000 can be seen in the graphic on the right. This shows the stagnation in the period from 2003 to 2005 and the slight recovery which 2006 has produced. This trend, in the opinion of the CAEB's (Confederation of Business Associations) Department of Economy, “will be maintained for the rest of the year because the European markets are growing economically, and this is causing a reactivation of demand and consumption”. The principal production sectors which have shown greater growth in the first four months of the year are: food and agriculture (potatoes, oils, and derivatives of carob); costume jewellery; capital goods and the wood industry. The volumes of sales and the growth of these areas since 2005 can be seen in the graphic. The shoe industry, which accounts for nearly 50 percent of exports from the production sector of the islands, has had a decrease of 8 percent but is starting an evident recovery because of demand from the United Kingdom and Germany, in spite of competition from shoes manufactured in south east Asia, principally in China. The exchange rate of the euro against the dollar, in spite of reducing competitivity, has not had much of a negative effect, mainly because transport is paid for in dollars which has alleviated the situation. The CAEB said that the rise in crude oil prices, “is having less of an effect on western countries than was at first thought, as the economies of these countries have been made more efficient from the point of view of energy. The entire income in euros is compensating for this upward trend in the price of crude oil. The only certain threat is existing international conflicts”.