THE Balearic Islands could be staring a major recession in the face due to the enormous economic impact of the coronavirus crisis, according to the CES Balearic Economic and Social Council.
The council maintains that the islands’ GDP could register a fall of between 3.7 and 9.7 per cent, something ‘unprecedented in recent history’; in the midst of the financial crash in 2009 the drop was 3.9 per cent.
The CES produced a report after business associations, trade unions and civil society representatives asked the council to draw up an urgent evaluation of the effect of the health crisis situation on the regional economy.
‘Coronavirus and the Balearic economy: emergency simulations’ sets out three possible scenarios based on nominal GDP figures from the National Institute of Statistics’ Regional Accounting. It takes as a starting point March 15 when the State of Alarm came into effect and puts as the date for a return to normality as between May 31 and June 30.
The first scenario is the most optimistic. It puts the affected period as March 15 to the end of May, and forecasts reductions of 50 per cent in hospitality sector activity, between 30 and 40 per cent in trade and 40 per cent in transport.
In the second the situation continues until June 15, with a decline of 60 per cent in the activities most related to tourism, but up to 80 per cent in certain cases, notably hospitality.
Finally there is scenario number 3, in which the halt in activity continues up to the end of June. In this case the slump in trade could be 70 per cent, and 90 per cent in hotels and catering.