Balearic economy surges forward into 2006

THE Gross Balearic Product is set to confirm a growth of 2.5 percent in 2005, nine points up on the previous year, thanks to a new upturn in the construction industry, which along with greatly improved figures in the Majorcan tourist industry is leading the economic boom in the Islands. Josep Oliver, President of the Balearic Business Confederation (CAEB) believes that the regional economy will maintain its steady growth into 2006 when it will even show figures several points above those reached in the current year. This will bring it more in line with the Spanish average of three percent. However, despite the fact industry is looking good with several major projects having begun this year, some doubts about the number of visitors from key client markets (chiefly Germany and Great Britain) in 2006 remain due to the fact that the World Cup is being held in Germany next year. In 2005, construction continued to flourish with a growth of 3.2 percent overshadowing the disappointing 2004 figure of 1.5 percent. This success has been due to a string of major public works in key infrastructure and homebuilding projects which went out to tender in 2003 and 2004, buoyed up by the high cost of housing which has risen by 12 percent. Service industries continue to improve with a growth of 2.5 percent in 2005. Figures show that they are 10 points up on last year thanks to major efforts in securing tour operator business on Majorca which laid claim to 4.7 percent more visitors this year. The Island's performance compensated to a large extent for the poor performance on Minorca and Ibiza which had 1.6 and 1.5 percent less visitors this year respectively. Majorca, whose economy is set to have grown by 2.9 percent this year (compared to 1.8 percent the previous year) has also boasted a 2.4 percent increase in the number of overnight stays made by visitors to the Island. However, this has to be balanced against the fact that the average length of stay made by clients in tourist establishments has fallen. Turning to Minorca, Oliver confirmed that the island economy will have grown only six points in 2005, five less than the previous year, while the gross product of Ibiza is set for an increase of 0.7 percent this year, four points more than in 2004. Internal consumerism remains another strong aspect of the economy boosted by improved employment figures and an increase in population. There are various indicators which confirm the trend although registration of vehicles (normally a positive sign) has not been one of them this year, in fact figures in this sector have fallen by five percent after a significant 10.2 increase in 2004. Separately, industry registered a 1.3 percent growth, four points more than in 2004 thanks to an upward trend in most of its key features, above all in export (3.8 percent more in the first nine months of the year), and in the industry production index (up 7.7 percent up until October this year). Oliver said the labour market continues to break records with a major increase (31.3 percent) in foreign workers thanks to central government allowing a period of time for unofficial residents to legalise their status in the Balearics.