The real economic challenge: knowing when to say enough

PalmThe Balearic Islands in the 21st century are putting economic theories to the test. While the principles established by theorists generally speak of growth, of going further, in the Islands right now the only thing increasing is the consensus on the need to change course and reduce. Depending on the organization or specialist consulted, the proposals and prescriptions for the future vary between decreasing or maintaining current passenger numbers. But in no case—not even the accommodation sector—is there a proposal to increase arrival statistics. The economic challenge for the Balearic Islands in 2026 has a name: knowing when to slow down and set limits.

The Islands begin in 2026 after half a century of tourist expansion that has exceeded expectations and planning. Tourism and airport infrastructure have become the main barometer of the Balearic economy.

At Palma Airport, annual figures show uninterrupted growth: from 2000 to 2024, passenger numbers increased by nearly 63%, with record highs year after year. In 2024, Son Sant Joan Airport closed with 31.1 million passengers, exceeding Aena's 2026 forecast of 29.4 million—14% above the ceiling projected in a strategic document prepared years earlier by the airport company. This example illustrates the mismatch between official forecasts and the reality of demand outpacing planned capacity. The upward trend in flights and passengers "puts the Balearic Islands under constant pressure and has direct consequences for natural resources," explains Jaume Garau, spokesperson for the Palma XXI platform, which brings together organizations concerned about the islands' social and economic future, in an interview with ARA Baleares.

Low cost, key to saturation

One of the keys to growth has been the consolidation of the low-cost airline model, which "has played a crucial role in making the Islands much more accessible to tourists, and also in terms of connectivity for islanders," says Tolo Deyá, Dean of the Faculty of Tourism at the University of the Balearic Islands (UIB). "That made sense. But the Balearic Islands need to make better decisions going forward about how and how much tourism they want to receive," he adds. A significant portion of the international and domestic traffic at Balearic airports has been concentrated in companies like Ryanair, easyJet, and Vueling, which have made the Balearic Islands one of their main markets for low-cost holidays and connections. According to Aena data, by October 2025, nearly 70% of international travelers had flown with low-cost airlines, an indicator of the archipelago's strong dependence on this model, which has contributed to intensifying the pressure on local infrastructure and services.

This model has been the foundation of the Balearic economy for decades, but it hasn't come without a price. Employment and income generated by tourism are still the cornerstone of the economy. But the human pressure from visitors and workers from outside the islands that this model demands has increased to such an extent that public services and infrastructure are often overwhelmed. All of this has severely impacted housing and the quality of life for residents. "Right now, we can't access our homes or enjoy the streets, which are taken over by terraces and other leisure activities," laments Garau. There's a growing sense among the population that most resources are geared more towards satisfying tourist demand than the needs of those who live year-round in the Islands. "This feeling is confirmed when you travel through towns and cities. We've lost many public spaces and a significant portion of our quality of life. If we want a sustainable economy, there's only one way: limit the arrival of tourists and the purchase of properties—it's that simple," he adds.

The consensus on limiting supply encompasses a large part of society, but institutions are not even capable of eliminating illegal accommodation, mainly vacation rentals. "It would be a good goal for 2026 to start working seriously on the illegal supply. It's important because it would allow us to improve the tourist experience and recover some of the quality of life for residents, which should also be a priority," admits hotelier Jaume Horrach.

Gross Domestic Product (GDP) per capita has been declining for years, and the Balearic Islands are losing the leadership they held decades ago in terms of wealth per inhabitant. Catalonia, Navarre, and the Basque Country have more diversified economies and currently occupy the top positions.

Professor of Economics Antoni Riera points out that when GDP per capita declines while the environment advances, the diagnosis points to a combination of structural factors, including "stagnant productivity in an economy focused on low-technology services with limited scalability, and a high dependence on tourism," external shocks, and difficulties in boosting real wages. Riera notes that demographic and residential pressure has increased the cost of living for islanders, and that this "erodes disposable income, even when there is employment." Another problem in the Balearic Islands is underfunding, which limits the capacity to make real changes. "There is limited investment capacity (public and private) to sustain capital-intensive transitions: digital, energy, and knowledge-based," which, according to Riera, are essential if the Islands want to continue toward a more balanced and sustainable model.

This analysis provides the conceptual framework for understanding why the Balearic Islands need to set limits and plan for growth. More balanced and value-driven, not just focused on tourist volume. "Many people say that without tourism, we would starve, and that's a lie," Garí emphasizes regarding the need to diversify the economy. "If we look at what happens in communities with higher per capita income, the industrial sector plays a key role because it needs specialists, pays better, and distributes wealth more equitably," he continues, lamenting that "the Balearic Islands have few and small industrial companies." "We need a strong boost," he says – statements included in articles from ARA Baleares. Productive diversification is key to the resilience and economic sustainability of the Islands.

Nobody imagined that by 2026 there would be more than 18 million tourists and more than 30 million passengers at Balearic airports. This means that the political, economic, and social debate must turn completely around. The objective must be to establish sustainable limits for capacity, infrastructure, and employment, rebalance the local economy, and promote alternative productive sectors with Added value and improved urban planning and the housing market to ensure the quality of life for residents. The Balearic Islands have always been ahead of official forecasts, and the challenge for 2026 will be to demonstrate that they can manage this dynamic sustainably, equitably, and with a strategic vision that goes beyond passenger numbers.