The Balearic economy has lost 335 million euros and 1.1% of GDP in three weeks because of the coronavirus crisis, according to Fundació Impulsa calculations.
During the first two weeks of the State of Emergency, the Islands shed 120.55 million euros and when non-essential activities were paralysed in the third week losses soared by another 214.30 million euros.
Antoni Riera, Technical Director for Fundació Impulsa estimates that the growth rate in the Balearic Islands for the first quarter of 2020 "will be negative”; second quarter will also close in the red because activity will not be fully recovered and that the Balearic economy will “go into recession” in the second half of the year.
Riera says it’s difficult to predict the economic recovery from this crisis but he is convinced that “the decisions taken will be key.”
He points out that the State of Emergency confinement “gives us time to look ahead, draw up scenarios and formulate the necessary contingency plans to get out of this situation as soon as possible”.
Fundació Impulsa’s Strategy Unit plans to launch working mechanisms this week to put together different actions based on public-private cooperation aimed at normalising economic activity, by reformulating current business models in the field of business viability.
The company advocates establishing conditions for the reopening of activity, starting with those oriented towards domestic demand, then extending them to other sectors.
Regarding Public Expenditure, Fundació Impulsa is committed to reallocating budget items and proposing a fiscal policy beyond the short term, that contemplates the future costs of obligations.
The fact that the Balearic Islands is almost entirely dependent on Tourism means it will likely be one of the last communities in Spain to recover from the coronavirus crisis.
The high season will probably be a total washout and a lot of hotels may not open at all, which will have a knock on effect on other businesses that focus solely on tourism.
The Hotel Association of Playa de Palma has asked the municipalities of Palma and Llucmajor to condone the payment of taxes and municipal taxes in 2020.
"We won’t be able to reopen if these expenses continue, we cannot have a mountain of taxes and municipal taxes in the drawer waiting to be paid and if the administration doesn’t do something the entire economy will be paralysed,” said, Isabel Vidal, Association President.