The Balearic Islands are off to a strong economic start in 2025, powered by a growing construction sector and supported by record-breaking tourism and employment figures. According to the May edition of the Momento Económico report from the Regional Government’s Directorate General for Economy and Statistics, residential development is boomin—particularly in the Pitiusas and Menorca—reinvigorating an already resilient economy.
Residential construction rebounds sharply
The number of residential building permits issued in the Balearics rose by 27.6% year-on-year in the first quarter of 2025, with March alone seeing a 67.9% increase compared to 2024. This level of activity hasn’t been seen since 2021—considered one of the best years for the construction sector in the past decade.
The revival comes as a welcome driver for the region’s economic outlook. Growth has been forecast at 2.7% for the year, outpacing the predicted Spanish average of 2.6% and the European Union’s modest 1.1%. While the regional government remains cautious amid more optimistic predictions by private analysts, momentum appears strong in key sub-sectors of the economy.
Tourism remains a vital engine
The report details a healthy expansion in the all-important services sector, which grew by 3.7% year-on-year in Q1. Tourism continues to be the pillar of this performance. Between January and March, the Balearic Islands welcomed 1.28 million visitors—2.6% more than the same period last year. Average stays remained steady at 6.6 days.
Spending metrics also suggest a higher-value visitor profile:
- Total tourist expenditure: €1.32 billion (+5.7%)
- Average spend per tourist: €1,026 (+3.0%)
- Daily expenditure per tourist: €155 (+7.2%)
With early data indicating robust seasonal bookings for the upcoming quarters, tourism is set to reaffirm its role as a key pillar of Balearic prosperity.
Industrial sector joins the party
Less dominant but increasingly relevant, industry also saw notable expansion during the first quarter, with production levels climbing in tandem with rising demand.
Inflation, however, remains a point of pressure. While headline prices are edging higher across Spain, the Balearics are leading the charge. Core inflation stood at 3.0% in April, well above the national average of 2.4%, further widening the region’s price differential.
Employment reaches historical highs
Possibly the most bullish signal: employment is at an all-time high. Social Security affiliations rose to 574,166 in April—an historic record for that month, representing a 3.4% year-on-year improvement.
Construction and services are the top job creators, though even the agricultural sector, which saw a slight annual drop of 1.1%, posted its third-best April result since 2009.
A strong foundation for the year ahead
The convergence of robust residential development, thriving tourism, expanding industry, and record employment positions the Balearic economy on exceptionally strong footing heading into the second half of 2025. Still, the government’s economic office is urging caution in the face of mounting inflation and broader geopolitical uncertainties.
Source: Spanish Property Insight