The economy of Tenerife maintained a high level of dynamism in the first quarter of the year, despite the fact that seasonality, after the Christmas campaign, causes quarterly decreases in some indicators of activity and employment every year, which, in no case, have meant a decline in annual terms. This is the conclusion of the latest Economic Situation Bulletin for the island of Tenerife produced by the Official Chamber of Commerce, Industry, Services and Navigation of Santa Cruz de Tenerife.
The beginning of the year 2023 has been marked by a favourable evolution of Social Security enrolment and an improvement in the business confidence indicator, highlighting the island’s economic strength at the present time. Specifically, enrolment grew at a quarterly rate of 0.3%, which is 1,226 more than in December 2022, and 4.8% in the last year, bringing the total number of enrolments on the island to 381,031, 17,294 more than in March 2022.
In both periods, the performance is better than the regional average, where the variations were 0.2% in the quarter and 4.7% in the last year. In this way, Tenerife registered the highest number of affiliations of all the islands of the archipelago up to March, representing 43% of the total number of affiliates in the Canary Islands.
This improvement in employment was also evidenced by the island’s employers, when in the latest business confidence survey, 13.2% stated that they had increased their hiring compared to the last quarter of the year 2022, 76.6% said that they had remained stable, and only 10.2% reported setbacks in their workforces during the first three months of the year.
These good figures enabled important levels of consumption to be maintained, despite the fact that inflation continued to put pressure on the pockets of the people of Tenerife. One of the indicators that demonstrates this strength is the sale of passenger cars, which, far from decreasing, grew significantly, both when compared to the fourth quarter of 2022 (12.3%) and to the first quarter of 2022 (44.2%), growth that in both periods exceeded that of the Canary Islands as a whole (6.5% and 39% respectively). In the first three months of the year, 6,199 passenger cars were registered in Tenerife, 677 more than in the last quarter of 2022 and 1,901 more than in the first quarter of 2022.
But it was not only local demand that continued to stimulate activity in sectors such as commerce and hotels and restaurants. The good records of tourist activity continued to contribute significantly to the growth of the economy as a whole. Thus, the total number of foreign and domestic tourists entering Tenerife during the months of January to March 2023 amounted to 1,719,545, a record for the island, which had never received so many tourists in any quarter of the historical series used for the preparation of this Bulletin.
If we compare this figure with that of the first quarter of 2022, we observe an annual growth of 22.5%, 37.6% more if we compare it with those who entered during the first three months of 2020 and 6.4% above those of the first quarter of 2019.
On the supply side, all sectors are showing significant strength, led by tourism activity, enabling all of them to increase their number of Social Security registrations, in addition to seeing a reduction in the number of registered unemployed in the last year.
Perhaps the factor that is least accompanying this important recovery in activity and employment is the business volume, which, far from growing, has not managed to recover the figures for companies prior to the pandemic, except in the case of the construction sector, which, with 103 more companies than a year ago, has managed to bring the total number of companies registered with Social Security on the island of Tenerife to 2,602, the highest figure since this Bulletin has been published.
BETTER RESULTS FOR BUSINESS IN TENERIFE
It is not only the good employment figures in all sectors that show this recovery, since according to the latest Business Confidence survey, 26.4% of the island’s companies stated that they had improved their business results in the first quarter of the year, compared to only 17% that showed a decrease, while the remaining 56.6% stated that their activity had remained stable compared to the last three months of the year.
The results of the companies during the first three months of the year and the forecasts for the fourth allowed the Business Confidence Indicator of Tenerife to increase by 0.4% in the survey of April 2023, the second highest growth after that experienced among the businessmen of the island of La Gomera (2%), exceeding, moreover, the regional average growth which for the same period was -0.2%.
After this good start to the year, forecasts remain moderately optimistic for the year as a whole, despite being subject to high uncertainty at the moment, fuelled by the future of high inflation on consumption and business costs, which will take time to abate, and by the effects that may be caused by the rate hikes being adopted to counteract it.