THE Balearic Islands has forecast a gloomy year ahead for its economy with a predicted 30% drop in GDP.
The 2020 forecast represents a significantly bleaker outlook than the rest of Spain, with the central government predicting a fall of 9.2% last week.
Revealing the prognosis at a press conference yesterday evening, the President of the Government of the Balearic Islands, Francina Armengol, attributed the region’s expected loss to its heavy reliance on tourism which has been significantly impacted by the coronavirus crisis.
With Spain’s borders being closed and there being no indication of when they will reopen, the Balearic tourism and hospitality sector is facing an uncertain future if they have no international market to cater for.
According to the Balearic Hotel Association (ACH) which represents hoteliers in Mallorca, Menorca, Ibiza and Formentera, 50% of hotels have already made the decision not to open this year.
In fear of incurring heavy expenses that cannot be offset with the usual influx of tourists, there is now growing consensus that reopening without clients would generate more losses than benefits.
Moreover, despite hotels being able to resume activity in Phase 1 of the COVID-19 de-escalation plan, the Hotel Chain Association in the Balearic Islands believe that reopening establishments will be ‘totally unfeasible’ without air connectivity.
In light of these factors deemed as a ‘huge blow to the islands,’ Armengol has asked Pedro Sanchez for ‘preferential treatment to boost the region’s economy.’
She said: “It is more important than ever that we work together and that the government understands that the Balearic Islands now needs special treatment.”
One of Armengol’s demands is for ERTEs, the temporary layoff of workers, to be extended until October of this year.
This she said would provide greater flexibility for businesses to reorganise themselves throughout the ongoing pandemic, as well as ensuring that their employees are protected.
“This measure will maintain the protection of workers and the viability of our companies,” she said.
Armengol is also asking that small-to-medium sized businesses (SMEs), which she described as ‘the most important to the fabric of the Balearic Islands,’ continues to be given access to economic aid.
At present, SME’s can apply for finance through the Confederation of Business Associations of the Balearic Islands (CAEB), who works with the Official Credit Institute (ICU) to grant loans for crisis-hit companies.