The BBVA bank is forecasting three per cent economic growth for the Balearics this year and 2.6% in 2019. The Balearics will have the highest growth this year among Spanish regions and second highest (after Madrid) in 2019.
The bank's latest report shows that there was 4.1% growth last year, which was one point above that for Spain as a whole and 1.4% more than the average for the past 35 years. Employment this year and next is expected to grow by three per cent, which would lead to an unemployment rate of 7.1% by the end of 2019. The report suggests that 36,000 new jobs will be created between this year and next.
Miguel Cardoso, the chief economist for BBVA in Spain and Portugal, says that results last year were better than had been predicted, as political uncertainty in Catalonia did not have the negative impact which had been thought. This was in any event offset by a "favourable global environment". However, a reduction of 0.7% growth in Catalonia this year (attributable to political tension) will, Cardoso argues, contribute 0.3% of the decreased growth in the Balearics.
In terms of tourism, BBVA believes that there will be a slowdown this year because the growth in number of visitors is "close to saturation". Because of this and also because of a need to continue creating employment, the bank says that the Balearics have to maintain the strategy of tackling tourism seasonality, typified by the opening of Palma's Palacio de Congresos, and of increasing the quality of hotels and the complementary sector.
The BBVA forecast of 3% growth this year is lower than the regional government's prediction of 3.5%.