The economy of the Balearic Islands accelerated at the start of 2026, posting a year-on-year gross domestic product (GDP) increase of 2.9% during the first quarter, according to the Economic Situation Analysis for the second quarter of the year. Presented on Thursday by Vice President and Minister of Economy, Finance and Innovation Antoni Costa and Director General of Economy and Statistics Catalina Barceló, the data shows the region's growth outpaced the Spanish average of 2.7% and quadrupled the European Union's expansion. All sectors recorded positive performance, with construction leading at 3.1% growth and services following closely at 2.9%.
The growth was widespread across the archipelago. Mallorca registered a 3.0% increase, while Menorca and the Pitiusas islands advanced 2.8%. The construction sector showed particularly strong dynamism, with housing starts reaching 1,325 units in the first quarter — the highest figure since 2008 — representing an average increase of 31.6%. Completed homes rose 17.5% to 536 units. The sector's growth rate was 2.5 times that of Spain as a whole, where construction expanded by 12.7%. Building permits for new construction also reached their highest level since 2008, with 2,418 homes approved in the first four months of 2026, driven mainly by multi-family housing. «The outlook for the future is positive,» Costa said.
Tourism, a cornerstone of the Balearic economy, continued to break records. Tourist spending reached a historic high of €5.861 billion through May, up 4.3% compared to the same period in 2025. Average spending per tourist per day rose 4.6% to €194, supported by a 3.3% increase in visitor numbers to 5.4 million. However, overnight stays moderated, declining 0.3% through May, while the average length of stay fell 3.5% to 5.6 days. «Overnight stays are contained and the average stay continues its normal downward process,» Barceló explained. The services sector saw revenue increase 2.6% through April, below the national growth rate of 5.0%, mainly due to a loss of momentum in the hospitality sector during that month. Retail trade recorded five consecutive months of year-on-year declines, falling 1.6% through May, compared to a 1.9% increase nationally.
Inflation remained a concern, with the consumer price index (CPI) reaching 3.4% in May, two-tenths above the national average of 3.2%. Core inflation also rose to 3.3%, three-tenths above the Spanish figure of 3.0%. Transport and hospitality accounted for much of the price increase. Costa noted that 83% of Balearic households have felt the impact of the war in Iran on their purchasing power, according to the Balearic Islands Opinion Studies Survey (EOIB).
Industrial production in the Balearics fell by an average of 6.2%, while it rose 0.6% across Spain. Other indicators painted a more positive picture. Real electricity demand grew 3.7% through May, reflecting economic dynamism. Renewable energy generation advanced 1.7 percentage points, now representing 16.5% of the total. Total exports declined 16.7%, but traditional export sectors performed well, growing 3.2% in the first four months to reach €109 million, increasing their share of total exports to 18.1%.
Employment reached a new all-time high, with 588,858 affiliates in the first half of 2026, a 3.0% increase compared to the same period in 2025 and 15.1% higher than in 2022. Services remained the main employment driver, adding 3.1% to reach 476,026 affiliates. Construction led relative employment growth with a 3.8% increase to 63,026 affiliates. Employment also rose in agriculture (3.6%) and, more modestly, in industry (1.2%), according to Barceló. The strong labor market performance underscores the broad-based nature of the economic expansion, even as sectors like retail and industry face headwinds.
