The economy of the Balearic Islands grew by 3.7 % in 2023

Mar 24, 2024 | Current affairs, Featured, Revista Lloseta, Thursday Daily Bulletin, Tradition

Economic growth, the highest in the last 10 years, was higher than that of Spain (+2.5 %) and was well above that of the European Union (+0.4 %).

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The economy of the Balearic Islands grew

The services sector accounts for 87% of the weight of the Balearic economy, while in 2023 the industrial and energy sector was the only sector in which economic activity decreased (-1.1%).

The forecast for 2024 is for an increase of 2.3%, driven by sustained services, allowing the economy to remain above the national average (+1.9%).

The Vice President and Minister of Economy, Finance and Innovation of the Government of the Balearic Islands, Antoni Costa, and the Director General of Economy and Statistics, Catalina Barceló, presented this Thursday the analysis of the Balearic Islands’ economic situation for the last quarter of 2023, which concludes that economic growth last year was 3.7%, a figure higher than that of Spain (+2.5%) and well above the EU (+0.4%), taking into account the data derived from the gross value added index (GVA). Thus, in 2023, the highest level of production has been recorded since 2013.

The Balearic economy has undergone an intensification of tertiarisation, to the detriment of agriculture and fishing, construction, industry and energy. This has meant that in 2023 the service sector will represent 87% of the weight of the economy, and is the only sector that has gained in importance. On the other hand, if we look at economic growth in 2023, of the 4 sectors mentioned, only industry and energy decreased (-1.1 %) – but it is the energy sub-sector which is the drag on this fall – while agriculture and fishing (+3.6 %), construction (+2 %) and services (+4.1 %) maintain an upward trend. Looking by islands, Mallorca and the Pitiüses recorded an increase of 3.8 %, while Menorca was at 2.7 %.

“We need to intensify sectors such as the nautical sector or innovation and technology. And for the latter, Parc Bit is a key tool. We have found a Parc Bit in a very complicated situation, and it needs a very powerful boost,” said the Minister of Economy, Finance and Innovation.

In the case of the quarterly year-on-year variation, in the last three months of 2023, the Balearic Islands grew by 2.3% compared with the data for the same period in 2022. In the second half of the year growth continued, but in a more normalised way than in the first months, once the rebound effect of the recovery from the pandemic has passed. Only the construction sector (-0.2 %) and industry and energy (-2 %) performed negatively, in contrast to agriculture and fisheries (+3.9 %) and services (+2.6 %). Moreover, in the case of inflation, in February 2024 it moderated to 2.6 %, below the Spanish rate, which stood at 2.8 %.

How can the data be explained?

The Director General of Economy and Statistics has presented some data that explain the economic growth in 2023. Some of them are the highest average expenditure per person per day so far, with 172 € (+8.3%); the leadership exercised by the Balearic Islands in the sales of services, with a growth of 13.3%, and the record of the highest increase in sales of retail trade (+5.8%); or the arrival of 22 million passengers in the whole of the archipelago. Enrolment increased in all four sectors: 4.9 % in services, 5.6 % in construction, 2.8 % in industry and 1.7 % in agriculture and fishing.

In conclusion, 2023 was a year of intense activity, led by services, which suggests a consolidated future. The construction sector is moderating the pace of growth and energy is weighing down the industrial sector.

Moreover, economic growth of 2.3% is forecast for 2024, a figure above the Spanish average of 1.9%, according to the Bank of Spain.

Finally, as major challenges to continue and strengthen development, Barceló has exposed two that stand out: on the one hand, the post-pandemic recovery still has not achieved the 2019 level in GDP per capita. “It shows that the economy of the Balearic Islands has grown a lot in volume, but not so much in value. That is why we see this as a challenge for future economic policy. We must manage to increase the variable of competitiveness, linked to productivity. If we don’t achieve this, we will have difficulties because we will continue with the same pattern of growth”, said the Vice-President of the Government.

On the other hand, the second great challenge for the Balearic Islands is the loss of water. According to figures from the Directorate-General for Water Resources, 86 litres of water are lost per inhabitant per day. While 328 litres are supplied, only 242 are consumed. “There is a lack of infrastructure and investment. That is why we want to make an active investment policy throughout the legislature,” said Costa.