After learning that the Balearic Islands is the community where business confidence has fallen the most in the first quarter of 2023, the Confederation of Business Associations of the Balearic Islands (CAEB) has assured this media that the lower profitability of SMEs, caused by the general increase in costs and high inflation, coupled with uncertainty over the geopolitical situation and the slowdown in the economies of the main source markets of the Balearic Islands (Germany and the United Kingdom), may be behind the fall in business confidence in the archipelago. Moreover, the slump coincides with a time when “tourism activity is at a low while preparing for the start of the next season”.

In this sense, from CAEB foresee “hard months” for SMEs in sectors such as trade or catering, which remain “in expectation of the start of the new season and, many, dragging loans and debts of the pandemic. This first quarter will be long for many SMEs until the reactivation of the season as we still do not have foreign tourism and local citizens have also been greatly affected by inflation,” they said.

Prudence for the coming season

Although “the forecasts are positive”, businessmen remain “cautious due to global uncertainty and high inflation”, said CAEB President Carmen Planas at FITUR, who stressed that this will be conditioned by “the economic situation in Germany and the United Kingdom, which may enter into recession”. Although the CEOE’s growth forecast for Spain stands at 0.8% for 2023 – she recalled – “there is still concern at the business level, which is facing the winter with inflation at 5.7%”.

Tourism companies are also losing profitability

The president of the employers’ association has indicated that the profitability of tourism companies has also been affected by the post-covid situation and the conflict in Ukraine, “especially due to the increase in the cost of energy and most of the materials”. He also pointed to manpower as a handicap that “we hope will be solved from 2023 onwards”