IN 2007 the Balearic economy will show an even greater growth than this year, thanks to the activity within the construction and tourism sectors.
These are the predictions made in the financial report produced by the Budget Project which determines the Balearic Government's budgets for 2007. A 2.9 percent growth in Gross Domestic Product (GDP) is predicted for next year, a forecast which the Balearic Minister for the Economy, Lluis Ramis de Ayreflor, described as prudent. The forecasts say that the agrofisheries sector will grow by 3 percent in 2007, as opposed to the 3.4 percent growth it experienced this year.
The increase in GDP in the industry and energy sector will be 1.6 percent, one percentage point more than the initial forecast for 2006.
As with this year, the construction sector will be one of the engines of the Balearic economy, although its growth will be slower.
The GDP for construction will increase by 3.1 percent, the same as the initial forecast for 2006. The Balearic Government thinks that the growing demand for housing, caused by low interest rates, as well as the growing population and the prospect of a revaluation of property, will maintain the growth in the construction sector. On the other hand, the Balearic Government is much more optimistic about the services sector and forecasts an even greater increase in tourist activity.
The forecast for growth in this sector is 3 percent, in contrast with the 2.7 percent initial GDP growth forecast for 2006.
With regard to the services sector, the Balearic Government says that the German market could be affected by the expected downturn in the German economy, as well as an increase of 3 percent in IVA (the Spanish Value Added Tax), which could affect package tours and flights, according to the Budget Project. The Balearic Government is also expecting a moderation in the increase of Spanish tourists during next year.
The growth of the Balearic economy for next year will exceed that forecast for the Euro zone, although it will still not equal the Spanish national average. In the euro zone, the GDP will grow by 1.8 percent in 2007, as opposed to the 2.9 percent forecast for the Balearics.
In the United Kingdom the GDP will grow by 2.8 percent, whereas is Germany it is expected to grow by just 1 percent.
In Spain, the Gross Domestic Product is expected to grow by 3.2 percent, which is a little below that of this year, which is predicted to be 3.4 percent.