Balearic economic growth this year will struggle to pass two per cent. Economic expert for Balearic bank Sa Nostra, Antoni Riera, said yesterday that the decline in the tourism and construction sectors will slow the economy down, consumer confidence will take a knock with families spending less, the commercial sector will in turn lose confidence and unemployment is expected to rise. But Riera brushed aside talk of a recession gripping the Balearics. Economic growth last year was 2.6 per cent, but in the final trimester of last year, consumer spending fell by 7.6 per cent on the year and the economy, for the second consecutive year, will grow at a rate inferior to the national Spanish average. The area expected to be hit hardest will be the service sector this year, mainly because of the decline in tourism. But how hard the blow to the service sector will be remains to be seen, Riera said it is still too early to tell. However, the industrial sector is expected to maintain its momentum with growth of over two per cent. The response from high street traders last month with regards to the winter sales was gloomy and was an indication that consumers have already started to tighten their belts and the continual rise in Balearic inflation is only going to slow spending down further. Many, especially those whose livelihoods depend on tourism have adopted a wait and see attitude, hoping that the summer season performs better than predicted with a late surge in holiday bookings.

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