- Direct Coronavirus, latest news
The Rigo family runs two shoe stores with 40 years of history in Magaluf , the mecca of mass tourism in Mallorca. The founder of the business came from Lloseta, an old industrial town on the island. At 45, his daughter Marga is in charge. The store has just reopened and the blind is raised "with great fear" in the face of the crisis that plagues this English ghetto of sun and beach, which every year in May begins to buzz with activity. "Now it's all desert, it's scary." Magaluf appears as a ghost town in the Far West: closed bars, static mechanical bulls, and a mosaic of molten neons. When attending this newspaper, Marga has dispatched only four people throughout the day. Outside are the queues for rent and electricity. "That doesn't forgive."
60% of its clients are Spanish who work in the hospitality industry. The rest, foreigners "who spend less and less". The Magaluf shoe store symbolizes the situation of the islands. On the one hand, the agony of the old local industry -in Mallorca it was 30% of GDP in the middle of the 20th century- compared to the tourism sector. On the other, the massive effect dominated the economy of the two Spanish archipelagoes, the Canary Islands , with 192,000 employees in ERTE, and the Balearic Islands, where 140,000 people have gone into temporary unemployment during the State of Alarm. Compared to April 2019, unemployment has grown 62% . As with the customers of the shoe store, without tourists there is no work. And without work there is no money to spend .
The balance of the coronavirus crisis is critical for island territories. According to the business foundation Impulsa , in just 7 weeks the Balearic Islands have lost 1.6 billion euros, 5% of their annual GDP, which according to the first estimates of the Balearic Government could fall by 30%. 9,000 million euros . The region leads the Spanish unemployment ranking and, like the Canary Islands, is the victim of a cruel paradox: they have been among the least punished by Covid-19, (209 deaths and 1,929 infected in the Balearic Islands; 149 and 2,240 in the Canary Islands), but the economic effects place them in the worst case scenario.
"It is an economic shock ," explains Antoni Riera , professor of Applied Economics at the University of the Balearic Islands. "The blow is twofold: it comes when the economic engines are relaunched, at the beginning of the tourist season; it also affects tourism." Foreign dependency, which in past crises allowed a better recovery, now plays against it.
Riera foresees three scenarios depending on the duration of the restrictions. "If there is no normality before the vaccine, we are going to collapse, the fall in GDP would be more than 30%." To understand the magnitude: "in the Great Recession of the 1930s, in the US it fell 12% and after the crisis of 2008, the Balearic economy fell 4%; we are talking about a coup almost 10 times worse". If confinement comes and goes, Riera warns, the effect would be similar, preventing a recovery in 2021. On the other hand, if the de-escalation is articulated intelligently and "taking into account the economic structure", the fall will be mitigated and in 2021 it may to have recovery, although "the current season is lost" . "It cannot be treated the same as an industrial zone as a tourist zone, it does not help us to open the airport in October."
The professor of Economic History Carles Manera was Balearic advisor of Economy from 2007 to 2011. He crossed the desert of the crisis of 2008, with a fall in income of 1,000 million euros. Although he is not "catastrophic", he predicts that this crisis cannot even be compared. "It is an unknown crisis , unlike any other in the last 100 years." The calculations it manages foresee a "double-digit" drop in the production of goods and services. Not as harsh as the one outlined by the Govern, but with severe consequences. "It is a very hard external crisis for some islands specialized in mass tourism, something that traditionally helped us emerge from other crises." In this case it will cost more, he reflects, because "precisely that dependence on foreign markets such as the German or the British goes against our economy." As the hotelier Gabriel Escarrer , CEO of Melià says, "the scenario is much more worrying than anything we have been able to know."
Reopening
The Canary Island president, Ángel Víctor Torres , hopes to open airports next month and international tourism in October. In the Balearic Islands, the hotel companies are preparing to carry out partial openings in July, but the Government of Francina Armengol is more cautious and claims to open only when there is maximum health security. The president of the Balearic employers, Carmen Planas, asks that the airports be opened "no later than July 1", guaranteeing tests and helping the business community. At the moment there are no dates and the Balearic Islands are facing their first summer without tourists in 70 years.
Armengol's prudent line is that of experts like Manera, who supports the need to prioritize health policies in the face of economic pressure . He maintains that with a good health policy and controlling the spread of the virus, a more advanced recovery could be achieved for the tourist season of 2021. For him, crises like this "should put us on the path of diversifying the economy." Of course, "without being carried away by agrarian romanticisms; mass tourism is our specialty and the great economic tractor, but it must help to boost other sectors such as the technology and renewable energy industries or the quinary sector, caring for people" .
Meanwhile, public services are trying to absorb the ERTE avalanche and layoffs. The Balearic Ministry of Tourism, in the hands of the socialist Iago Negueruela, has had to relocate 90 people to process ERTE. It is a very "crude" situation, admits Negueruela.
Hopes
In this tunnel there are trains of hope. One of them arrives with the locomotive from Europe. Mallorca is focused these days on exploiting its historical relationship with Germany. Four and a half million Germans visited the island in 2019 and 18,000 have houses there. The Balearic Government has received 200 letters from Germans , many of them of great purchasing power, who ask to be able to come to the Islands and these days maintain contacts with the federal government. "For many Germans, one thing is Spain and another Mallorca", explains the owner of a luxury boat rental company.
Also working on this stage are important hotel chains of international scope and of Mallorcan origin, such as RIU , linked to the German touring giant TUI and with hotels in the Balearic and Canary Islands. There is an intention to exploit the health security of both territories (Germany has been one of the least affected powers), but the key is in the hands of the states and it is not known when the Son Sant Joan airport will open, third more import from Spain, now a big empty mausoleum. On April 18, 2019, 107,000 passengers passed through its terminals. On April 18, just 173 arrived.
The Balearic Islands and the Canary Islands were the first two Spanish regions to register cases of coronavirus but the only ones that have kept bastions free of the disease, such as the islands of Formentera or La Graciosa. However, the fragility of their economic ecosystem, their dependence on the global economy and their isolation threatens to charge them dearly for the pandemic.
In accordance with the criteria of The Trust Project
Know more- Balearics
- Unemployment
- economy
- tourism
- Coronavirus
CoronavirusDancausa (Bankinter): "In the next three months the impact of the crisis will be shown in all its magnitude"
Macroeconomics The IMF asks governments to "urge banks to renegotiate the conditions of loans to families and companies"
Basque Country The crisis will reduce tax collection by 20% and the Basque Government will have 2,000 million less