The Balearic Islands are expected to maintain strong economic momentum in 2026, with projected Gross Domestic Product (GDP) growth reaching 2.2%, a rate that doubles the forecast for the European Union. This outlook highlights the resilience of the Balearic economy amid an international environment characterised by uncertainty, geopolitical challenges and changing market conditions.
The latest economic assessment for May indicates that the Balearic Islands are expected to expand at the same pace as Spain as a whole, reinforcing their position as one of the country’s most dynamic regional economies. The positive outlook is supported by the performance of several key sectors that continue to drive economic activity and investment across the archipelago.
Construction remains one of the strongest contributors to growth. New housing development increased by 30.2% through February, reflecting sustained investment and strong activity within the residential market. In addition, building permits continued their upward trend. After an initial recovery in Mallorca, growth in permits expanded during March to Menorca and the Pityusic Islands, generating a significant increase across the entire region.
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The Balearic Islands will grow twice as fast as the European Union despite high uncertainty
Tourism continues to strengthen its contribution to economic value. During the first quarter of the year, tourism expenditure reached €1.348 billion, representing a 2.3% increase compared with the same period of the previous year. Visitor spending per person also improved, while daily expenditure recorded a notable rise, confirming the sector’s ability to generate higher economic returns despite moderate growth in visitor numbers.
The increase in tourism revenue occurred alongside relatively stable tourist arrivals. Total visitor numbers grew by just 1.2%, with differing performances among islands and source markets. International tourism generally showed positive results, while domestic demand softened. Nevertheless, the increase in average spending demonstrates the continued shift towards a tourism model focused on value creation rather than volume alone.
The services sector remains the principal engine of the Balearic economy. Professional activities led growth during the first quarter, posting gains close to 10%. Service sector turnover also expanded steadily, while transport-related activities continued to perform positively. Retail trade maintained levels similar to the previous year and the hospitality sector remained stable.
Industrial activity, however, experienced some moderation, particularly within non-energy manufacturing industries. The decline in consumer goods production contributed significantly to this slowdown, while energy-related production remained broadly stable.
Employment indicators continue to reflect a strong labour market. In April, Social Security affiliation increased by 3.2% year-on-year, bringing total employment close to 600,000 workers, the highest level ever recorded in the Balearic Islands. Growth was observed both among salaried employees and self-employed workers, reinforcing the region’s positive employment trend.
Inflation also showed signs of moderation during April. Consumer price growth remained slightly below the national average, while underlying inflation stabilised. Lower housing-related costs helped offset upward pressure from hotels and restaurants, contributing to a more balanced price environment across the region.
The combination of sustained economic expansion, robust employment growth, strong tourism performance and continued investment places the Balearic Islands in a favourable position for the coming months. Despite the prevailing uncertainty affecting international markets, the archipelago is expected to maintain a growth rate significantly above the European average, reinforcing its role as one of Spain’s leading economic regions.