UNCERTAIN OUTLOOK ON THE HIGH STREET AS DOMESTIC CONSUMER CONFIDENCE FALLSBy Humphrey Carter
THE Balearics is falling into recession, president of the Balearic Federation of Commercial Businesses (Afedeco), Pau Bellinfante, said yesterday. Presenting the federation's annual report, Bellinfante said that while in the year 2000, the commercial sector accounted for 13'28 per cent of the service sector's gross national output, last year, its share of the market shrunk to ten per cent. The Afedeco president said that the figures are very worrying, adding that the commercial sector is not only the Balearics' biggest employer but offers the most stable employment. Apart from the obvious reduction of commercial activity caused by the sharp fall in tourism, there has also been a drop in domestic Balearic consumer demand. Bellinfante said that providing domestic demand remains high, the commercial sector can ride any down turn in tourist trade, but he said this is not the case as the commercial sector is extremely sensitive to recession, adding it's always the first victim, but the last to recover. The federation has contacted the local government with the aim of introducing contingency plans and measures to try and stimulate the commercial sector before the political parties embark on their election campaigns. Bellinfante also explained that the aim of the meetings with party leaders and candidates is to discuss each party's commercial policies and any others which may have a direct affect on the commercial sector. For example, the commercial sector is against Palma City Council's plans to close the centre of Palma off to all traffic. Bellinfante said that city centre shopkeepers fear that such a move will be the death of them, especially during a recession which could drag on for a long time. Afedeco and its members want to see the city council develop more car parks in the old part of the city, provide more training for the sector and give the city councillor for commerce a much bigger budget. Juan Pallarés, Afedeco's vice president, also dismissed claims that shopkeepers put their prices up last year. He said that the contrary is the case, despite the increase in operating costs, prices stayed the same, with shopkeepers having to console themselves with a much narrower profit margin. With local elections looming in May, growing concerns about this year's tourist season and a steady decline in domestic consumer confidence, the commercial sector is facing a bleak future and the poor performance of the winter sales have not helped to lift spirits in the high street.
THE secretary general of the USO workers' union, said yesterday that the Balearic economy is very delicate and that any further down turn could have serious consequences for the less fortunate sections of society. Unemployment in the Balearics rose by 34.5 per cent between October and December last year and, according to the latest union survey, the biggest concern among the active population is job security with the cost of living rising nine times faster than wages.
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