THE Balearic Gross Domestic Product (GDP) will have grown by more than three percent this year, after six years in the process of recovery, according to the CAEB (Confederation of Business Associations). Their report estimates a rise of 3.1 percent in the GDP for this year and forecasts a rise of 3.4 percent for next year.
The President of the CAEB, Josep Oliver, described the increase in all sectors (production, labour and consumer) during 2006 as positive because a moderate growth in the Balearic economy is sustainable. Oliver, who was accompanied at the presentation of the report by the director of the CAEB Isabel Guitart, and by the head of the Economy Department Vicenç Tur, highlighted the fact that this year business confidence has recovered in all sectors, and with it the increase in investment in the production, construction and service sectors, and especially in the tourism sector. This is a favourable time as we have expectations for the future. In the breakdown by islands, Majorca was shown to be the most dynamic this year with a growth in GDP of 3.3 percent.
Majorca was followed by Ibiza and Formentera with a 2.8 percent growth, and then Minorca with a 1.5 percent growth.
In Minorca's case, the decrease in the number of tourists from some markets, especially the British, affected its normal development but, in comparison with 2005, it has grown by nearly one percentage point. With regard to the production sectors, construction (with an increase of 3.4 percent) has remained the sector with the highest increase, aided mainly by public works projects in 2004 and 2005.
TOURISM
In spite of this, the engine of the economy is the services sector, which represents 80 percent of the Balearic GDP and which will grow by 3.3 percent in 2006, eight tenths of a percentage point higher than in 2005, explained the President of CAEB.
Tourism has consolidated the improvement in this sector, with forecasts of 12.5 million tourists, increases in the German, British and Spanish markets of 6.2, one and 23.3 percent respectively, while tourist income at the end of this year is expected to have increased by 8.4 percent, which will be a total of 11'000 million euros.
All tourism throughout this year has increased, except the average stay which was 6.5 days, as opposed to 7.08 last year, and trends indicate that it will decrease.
Industry, for its part, with a growth of 1.6 percent, is continuing to benefit from internal demand from the construction and tourism sectors, and from an improvement in exports, while agriculture has grown by 2.9 percent, more than one percentage point greater than in 2005 (1.7 percent), he said.
On the subject of the Consumer Price Index and bank interest, Oliver said that he does not consider the rise in interest rates to be a particular threat to the development of the economy and added that it had in fact contributed to the moderation of prices, which this year will rise by 2.6 percent, as opposed to 3.7 percent in 2005.
Predictions for the Consumer Price Index have also been modified. It is expected that it will grow by 2.6 percent but this percentage could be lower once the December figures have been added, assuming they are not high, said Oliver.
The President of the CAEB highlighted especially the growth in employment and companies. The amount of people in employment at one point reached 500'000, with an average over the year of 455'000. And it must be remembered that the number of foreign workers has grown by 21.5 percent.
Asked about the poverty which exists in the Balearics, Oliver played down the figures from the Social Economic Council (CES) which say that around nine percent of Balearic families are living below the poverty line, one percentage point above the national average. The poor on the islands are wealthier than in other parts of Spain, and we must not take too much notice of these figures, he said.
Balearic economy will grow by 3.1pc