Balearic exports are mostly destined for European markets. | Archive

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Balearic exporting companies, which in any event have to factor in the costs of insularity, are being hit, like all exporters, by the rise in Fuel prices and the impact of the war. Raw materials and their supplies are affected and so therefore is production.

The president of the Chamber of Commerce in Mallorca, Antoni Mercant, stresses the complexity of global logistics and the effects of changes in production. There are "global repercussions for everything related to imports and exports".

Agricultural products, footwear, furniture; these are among the export sectors, all of which are having to deal with greater expense. Mercant says that raw materials will continue to become more expensive until the beginning of 2023. This is when, according to analysts, there will be a "normalisation" of markets in the context of the current situation, "in which the war doesn't help at all in reducing inflationary and energy tension".

With the pandemic practically under control, everything had indicated that there would be economic recovery from the end of last summer. "But the increase in the price of fuel and the conflict have devastated all forecasts for economic growth and business activity."

Mercant adds that the viability of companies is affected by a whole series of imponderables. The Balearic economy, as with the rest of the world, is experiencing "a perfect storm that was totally unexpected four months ago", even if rising prices of fuel and energy were detectable by the end of last summer.

Over the past three years, except for the period of lockdown, Balearic exports have been steady. Alcoholic beverages, chemical products, essential oils, furniture and shoes are among the main items. For Mercant, "having exporting companies provides great added value for the Balearic economy, as this enhances the image of companies and positions the islands in the international market".

An end to the war will be key for all regional economies, especially for the Balearics. Mercant explains that data from the last quarter of 2021 and the war indicate that there will be a negative impact on the 2022 financial year. "Anything that involves an increase in production costs has an impact on the entire value chain."