Business leaders in the Balearic Islands have noted an improvement in economic activity during the second quarter of the year, suggesting a break in the downward trend that had persisted for five quarters, that is, since the beginning of 2025. This is reflected in the latest Economic Trends report from the Confederation of Business Associations of the Balearic Islands (CAEB), published on Wednesday. The analysis, prepared by the Impulsa Balears Foundation, confirms 2.8 percent growth from April to June, which is one tenth of a percentage point higher than the previous quarter and marks the end of the slowdown that began more than a year and a half ago.
Furthermore, the Balearic economy also surpassed the national average for growth. The report highlights that the performance of the Balearic economy is in line with the stability shown by the Spanish economy during the same period. The latter “has managed to hold on thanks to domestic demand,” which has been a key factor in its performance during the first half of the year. Regarding the European context, with the exception of cases like Portugal, most countries continue to move forward with the handbrake on, as is the case with the main EU economies: France, Germany, and Italy. For its part, the US economy saw its growth slow between April and June. Meanwhile, the Balearic Islands closed the first half of the year in a solid position, managing to weather much of the impact of the war in the Middle East.
Domestic demand has proven to be an equally crucial pillar of strength for the Islands: private consumption and investment remained solid despite the global context of high inflation, which was exacerbated by the Persian Gulf blockade. In this regard, the report highlights that prices for the basket of essential goods and other goods and services continued their relentless rise, while employment in the archipelago reached new records, a consistent trend since the end of the pandemic. On the other hand, fiscal measures to alleviate the rise in fuel prices, at least during that period, provided consumers with a significant reprieve.
The growth of the service sector has been a fundamental pillar of this trend, especially in the tourism sector. Record figures for visitor arrivals and hotel stays – in the context of the Easter holidays and the start of the high season – are cited as key factors. Tourist spending also reached record highs. “Mid-year, estimates confirmed that the economy of the Balearic Islands has found the strength to halt the downward trend observed over the last five quarters.” The number of tourists increased in Menorca (5.1 percent) and Mallorca (2.9 percent), while growth lost momentum in Ibiza and Formentera (0.5 percent).
The president of the business organization, Carmen Planas, has highlighted that, with August figures now available, inflation stands at 4.4 percent, “significantly worsening the situation for many businesses and families.” However, the overall picture for the second quarter is largely positive, Planas insists, and she emphasizes that the increase in tourism spending “opens a path to reducing dependence on volume and focusing on value.”
