A GLOOMY OUTLOOK FOR LOCAL ECONOMY

By Humphrey Carter THE coming year looks set to be another financially tough 12 months for the Balearics with the economic outlook the gloomiest in Spain. The Balearic economy has grown by just one percent this year, according to the latest chamber of commerce sponsored report published by Hispalink and produced by 20 universities across Spain. Based on this year's poor economic performance in the Balearics, Hispalink has concluded that the coming year sees little improvement. The Balearics' one per cent growth is well shy of Spain's top performing region Aragón, which has enjoyed economic growth of 2.8 percent, and Murcia and Madrid where the regional economies grow by 2.5 percent. The national average this year has been 2.3 and most regions have managed to either match that figure or better it slightly. Only the Balearics, the Canaries, Asturias and the Basque Country fell short. However economists have expressed concern about the 1.8 percent gap between the Balearic and Aragon economies. The main reason for the differentials between the growth of regional economies this year has been uncertainty in the tourist sector created by the poor performance of certain European economies, in particular Germany. Two of the four worst performing economies relate to Spain's two leading tourist destinations, the Balearics and the Canaries. The Hispalink report states that, after the regional economic boom in 2001-2002, this year appears to be the start of a period of more sustained growth. Generally, the outlook for 2004 is healthy with regional economies, on average, forecast to grow by around 2.7 percent, slightly better than this year. However, the Balearic economy is not tipped to grow by more than 1.8 percent, again the lowest in Spain, while at the other end of the scale, Castilla-La Mancha is forecast to race away at a rate of 3.2 percent. Tourism is going to be key to the Balearics' fortunes in the coming year. Tourism Minister Joan Flaquer expects to see a seven percent increase in the number of visitors next year, although there is still a huge void in the market left by the declining German market. Flaquer however wants to see tourism figures rise to match those of the boom years at the end of the 90*s. Many shops and restaurants have complained of a poor festive season with trade down and the winter sales period will act as a good indicator as to whether there has been an improvement in consumer confidence or not in the second half of this year. But many consumers are complaining of high prices because of the euro and tourists that they are finding Palma, for example surprisingly expensive.