Balearic economy has entered into period of slow growth

Consumer confidence among Balearic families is “low” and the economy is already showing signs of recession according to one of the region's leading economists Miguel Alenyar, director of Social and Economic Studies for the Balearic bank Sa Nostra. Alenyar said yesterday that last year gross national product in the Balearics reached 7.1 percent, nearly double the GNP for Spain and the European Union, but by the close of the year the GNP will have settled at around 3.5 percent, and the economic forecast for 2001 indicates little or no increase. The economist explained that the construction industry is going to be hardest hit next year primarily because of high interest rates, this year's wave of mortgage hikes and the cost of energy products. He went on to say yesterday that “with regards to the future, consumer confidence is low” and that next year the high street will experience a drop in consumer spending and there could also be a rise in unemployment, especially in the construction industry. Apart from interest rate increases and high fuel prices, which are the highest in Spain in the Balearics, Alenyar said yesterday that consumer confidence in the Balearics is “much lower” than elsewhere because of the instability and uncertainty in Germany and the United Kingdom - which are the Balearics' two main tourism markets. According to a report produced by Eurostat, up until the end of last month, consumer spending in Germany was down by six percent - which means that Germans are waiting to make any important financial decisions, such as booking a holiday for next summer.