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Recession continues despite slight financial improvement

C.M.W.Maó20/09/10 0:00

According to the Director of Sa Nostra's Economic Research Centre and the Balearic University, Antoni Riera, the worst of the crisis has passed but we continue to be in recession. The Menorcan economy hit rock bottom in 2009, with a 2% fall in the GDP (0.2% higher than the Balearic average) but is still far from emerging from the crisis and at the end of the year will still be in the red, although the prediction is that the drop in the gross domestic product will be 1%.

Unfortunately this halt to the economy's fall has not been translated into improved well-being for families (the income per capita is down by 3.5%). To the contrary, the slight improvement in the Menorcan economy (and in the other Balearic islands) has been achieved through the loss of jobs and low wages, Riera explained during the presentation of the Balearic Economic and Social Report for 2009 in Maó last week.

For the economist, the only positive lesson learned from the crisis is that the financial and social sectors have recognised the need to make structural alterations to gain in efficiency, through diversification - mainly in the services sector - specialisation in labour, innovation and new technology.

The report shows that last year the economic crisis affected all the production sectors; families, businesses and public institutions, bringing about a change in relations in all areas of the economic and social fields.

Riera drew attention to the fact that whilst businesses and families had "tightened their belts" last year, the public sector had not but that it would have to confront the same financial hardships as the rest of society if it were not to mortgage the future.

The director of the CRE warned that the proximity of elections and the desire of many politicians with a short-term view of the economy to show results were incompatible with emerging from the crisis.

He also warned that the only way in which the Balearic business sector - which mainly comprises small and medium firms - could become more competitive in a globalised economy would be to form groups and business associations through the creation of platforms for collaboration and centralised purchasing and sales.