Spain | Balearic Islands Economic Outlook 2024

Summary

The GDP of the Balearic Islands could increase by 2.5% in 2024 and 1.7% in 2025, which would allow the creation of 28,000 new jobs in the region in the biennium

Key points

• Key points:
• Social Security affiliation appears especially dynamic in 1Q24, with significant increases in Ibiza, Formentera and Mallorca. Card spending data show that the improvement in demand comes from an acceleration in the contribution of foreigners, which is concentrated in the services sector.
• GDP could increase by 2.5% in 2024 (Spain 2.1%). The European economy seems to have bottomed out and could show a progressive improvement during the year. The Balearic economy depends crucially on the continuation of tourist flows from the Eurozone and households on the islands will benefit most from the fall in the cost of finance.
• The GDP of the Balearic Islands is expected to moderate its growth, and growth is expected to be 1.7% in 2025 (2.0% in Spain). If these forecasts are met, the unemployment rate will be reduced to 9.5% and 28,000 new jobs can be created by 2025.
• Prices in the tourism sector are increasing. The loss of competitiveness is already having an impact on the flow of tourists from the Iberian Peninsula. This, in an environment of labor shortages and rising labor costs, without any significant progress in productivity.
• The lack of investment in recent years, the saturation of the territory and the tourism sector, added to the lack of human capital, could be a drag on the progress of the economy.

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