No recession in Malta - so far

recessions come and recessions go...its all part of the economic cycle in a mixed and open economy such as the Maltese economy. In fact recessions help fuel the next phase of economic growth as it induces better utilization of resources. What we have to becareful of is an economic depression, a prolong and sustained period of economic retraction.

I think that Malta will be hit in three ways next year.

a) The financial crisis will hit home sooner rather than latter. Forget this talk of Maltese banks being conservative. Just wait till the construction bubble bursts. Malta is over supplied with housing stock and contractors will default.

b) Export orianted industry will be hit hard by global recession. Factories will close down, hundreds will be laid off.

c) Tourism will most probably decline. Our major markets are already in recession, UK, Germany and Italy.

Malta will be in recession in 2009 and it has nothing to do with electricity bills and the PN. The government will probably have to do some fiscal adjustments mid year to mitigate against these economic factors. 2009 will show how Smart the maltese really are.

@Joe Vella
You got it wrong again! Russia now has a vibrant CAPITALIST system, and not a communist or a socialist one. You pick and choose YOUR realities to suit your arguments.

@C.R. Taliana

Recessions big or small cannot be concealed and no government creates them. What is different this time is that we have two distinct components to which we have given the generic term 'recession'

Most eceonomic recessions are the result of many factors, some cyclical some not. Low demand for a surplus supply of goods can cause lay-offs and the sooner the consumer starts to buy again, the sooner one gets out of a recession. Harping on how bad things are, through the media or word of mouth, the scarier people become and the more they postpone their big ticket purchases, thus deepening a recession and making it harder and longer to get out of. Malta has just touched the surface of the global recession and one hopes that it will not deepen much more.

The second component is the financial industry collapse due to lax regulations of the banks (especially in the USA) and the aggressive lending by banks. In Malta, thankfully, we do not have this problem and therefore, the government does not have to worry about bailing banks out.

Taking the above into consideration, Malta seems to be on the right but cautious track.

Heading says it all -----''So far''

From my very ignorant point of view, I believe he world has been going into recession for the last couple of years, but things got so bad recently that they can no longer be hidden from us commoners. How can one say that we are not in recession when you have many companies that have closed recently or that pay their workers for a 3/4-day week????? I am sick and tired of hearing economists, bankers etc ... dish out their theories while we are always having less money in our pockets.

Ask the workers who where put on 30 hours a week schedule if there is no recession… I think we all know the answer!

One of the reasons that France has not gone into recession is because its economy is not based on crude oil but on nuclear energy. Hence the cost of its energy production is very stable.

Regardless to what the IEA is saying, namely that oil prices wil go up again, in my opinion there has been so much advances in renewable energy systems that soon oil will be competing with these energy producing systems. many such systems have already been set up and running at magawatt scales and much more are in the pipeline. The USA shall become independent of oil imports by the year 2015, while Europe is already geared up for renewables. Hence the price of energy cannot really go up again to $100 or more per barrel. Forget global warming: The energy revolution is here riding on an economic wave and oil will soon become the pariah of energy generation.

A new economy is emerging and we Maltese have to keep our eyes open to these developments. Even electric cars will soon become a very viable and economically feasible option.

All these developments will weigh on whether Malta goes into recession or not.

Mr. Bonello nowhere said that we will not HAVE a recession. Hesaid that 'There are no economic indicators which point to a looming recession in Malta', while he also said 'that nobody can envisage the end of the international financial crisis'.

Comments trying to put words into other peoples' mouths are not compatible with honesty.

We Maltese are still in a pretty good state, in spite of the unfortunate situations of the three companies that have been hard hit by the downward trend in auto inndustries in EU and USA. Other manufacturing firms are still operating.

I have heard rumours rying to insinuate that Mlata is to go through a very bad time come next year. These may be just malicious or hughly unprofessional panic rumours. I recommend that we weigh what our economists and experts say before commenting irresponsibly.

Despite the 4 day week and lay-offs, Malta is still attarcting a lot of foreign investment. The net result is that the MaltesE GNP is positive and employment is still on the decrease. This mEans that Malta is DEFINITELYnot in a recession. The future? Depends on international economy, price of crude..etc.

@ I Galea

No matter how you try to twist things around, the Maltese Lira was not recognized anywhere and if you say that you could go to a bank anywhere else but Malta, and exchange it for local currency, you know you are fibbing. Whenever I received bank drafts or cash from Malta in Lira denominations, they would always be sent to a Central Collection Department and would receive the equivalent in local currency some two weeks later, if lucky.

Why would Canada change to the Euro? It has its own currency, traded worldwide, posted on all stock exchanges and readily converted anywhere. Besides, it is not part of the European Union and has no desire to obtain any status with the EU other than have trading agreements. It seems, as always, that you shoot your mouth before you engage your brains.

Worldwide recessions and bank failures have nothing to do with the Malta government and I was not advocating that the media 'cheat' the public by painting everything rosy, but it is a fact that if one worries people too much the result could be disastrous.

Good thing we do not have Joseph and you solving world problems!

I do not understand why blame the PN govt. for a worldwide recession. In the General Election campaign, Dr. Gonzi used to warn of storms and bad weather which were on the horizon. But he also encouraged us to fight it and we'll surely come through it with minimal damage. That is why the slogan was Flimkien Kollox Possibli. We have to pull the same rope in the same direction. Those who are not prepared to do so, the least they can do is not pull the other way.

Some contributors (Maria Falzon) are mentioning recession and Utility bills in the same sentence. The recession has nothing to do with the Utility tariffs.

@ Effie Carbonaro - Do not try and make the situation worse than it really is as the opposition does. Of course a recession would hit us eventually. Are we going to blame the PN govt. for a worldwide recession? Now we hear that even Japan is feeling it. Bad PN govt. for putting USA, UK, Germany, Italy, Japan and so on in a recession. Grow up MLP (red mist) followers. Hotels are at full capacity, contrary to what you wish. Some of them are issuing stop sales as has been the case for quite a while now. As for the drydocks, if I vote PN for nothing else, it will be for the decision to sell this cancer called drydocks. Where I do not agree with the govt. is paying large sums to the 'Aristokrazija tal-Haddiema' to resign from a company they brought to it's knees, while other honest workers in other firms get zilg if they are redundant. I can assure Mr. Carbonaro that we all feel the crunch, but we have to fight it not surrender to it. That is the difference between PN and MLP.

As for I. Galea (doom monger), you're not even worth answering.

Certain people don't understand anything. Recession means six months of negative growth. Malta did not experience this yet. Full stop

the worst is not over yet...... banks might be badly hit by a property bubble which is waiting to burst.
And consumers are not being protected since the cost reduction in oil and interest rates are being held by the state and the banks respectivley.
The recession will come and very soon.....

Tell it to Toly, Methode, etc. So if we don't have a recession here why the government is killing us with all the higher taxes and tariffs?

J Martinelli
You are wrong about the Malta Lira. I exchanged it in quite a few foreign countries without any problems. Seeing that you are so eager about the euro, why don't you start a campaign for Canada to adopt the euro and join the eurozone?

"This means that the media has the responsibility not to paint everything pitch dark since it could contribute to a self fulfilling prophecy."
So you want the Media to cheat on the people so as not to cause any problems for your Gonzipn do you? Shows how you have been brainwashed by the Gonzipn Goebbels propaganda machine.

Joe Vella
Every time saved by the State with taxpayers money. If it is so good it should not have to ask for the Governments to save it should it? Re Russia, everybody likes to experiment, a few compared to the masses have become billionaires, but ask the common Russians what system they prefer.

This does not mean that I propose the Communist system. Far from it.

Mr Bonello is very naive if he thinks that there will be no recession here, of course it will come and it won't be long, all the big european and american producers are suffering and of course there is a knock on to small economies like ours. we still do not know how badly the banks in Malta were affected by the financial meltdown, but Mr Bonello knows!! Believe me there is going to be a recession here as sure as morning follows night, Mr Bonello needs to look a bit closer at just what is happening

Part1

I love it when people seem to anchor themselves in the past. Nobody talks about the Maltese Lira any more because it was monopoly money good only in Malta and completely unknown and non-tradeable anyplace else.

Before one comments on recessions and what other governments are doing about them, one should know some basic facts.

1. There are two types of problems right now and combined, make present difficulties even more serious than ever before. We have the Financial collapse of International banks and the economic recession brought about in conjunction but not necessarily the result of the financial industry collapse.

2. The billions thrown in by the US to their banking system has nothing to do with the economic recession. It is simply to keep those banks open for business thus avoiding a depositors' run on their money.

3. The 'recession' rescue package is separate and still being worked on by the group of 20 including the US, EU and others. The economic recession is the failure of large companies due to lower demand for their products.

In Malta, the first situation has been avoided due to the good work of the banks and their conservative lending practices...

Part2

The banks remain liquid and non-performing loans appear to be within acceptable levels. Notwithstanding a similar situation in Canada, which was rated as having the most solid banks in the world, the government took drastic measures to ensure continued liquidity and availability of cash for loans to small business. It purchased from banks some $50 billion Canadian in insured mortgage loans. In other words, banks traded paper for cash. The government still holds security for the money it forked out and hopefully when things get back to normal, it stands to make a neat profit too. The same could happen in Malta if things turn sour and banks find themselves strapped for cash. In any case it could be in the end a win-win situation.

With regards to the economic recession, it is imperative that positive wins over negative. This means that the media has the responsibility not to paint everything pitch dark since it could contribute to a self fulfilling prophecy. If people are constantly bombarded with the news that things are bad, they will cut down on purchases, entertainment, food and travel. The diminishing demand will create unemployment.

Expect the worst but hope for the best!

Of course Malta is has not gone into recession...... Malta's economy has been in recession for many years!! We have never had a healthy economy, take a look at the salaries for instance!

Regards,

Brian

When I was young, people used to meet in the village wineshop, or on the church parvis, and speak on all subjects under the sun, with assumed impressive authority. Online facilities seem to have replaced the village wineshop and the church parvis.

As a professional person, the governor of the Central Bank weighs his public statements with the responsibility that his office carries. He does not have the freedom that politicians and opinion writers assume to alter the precise definitions of the technical terms that he uses.

I need not add more except that many contributors must have missed the phrase "SO FAR" in the title of this interview.

@ l Galea

"Anything wrong with the government running business.........."

Yes it is wrong for Governments to run business. Private enterprise can do it better and more effectively. They also pay taxes to help the so called not-so-well-off.

"The only thing that can be concluded is that PRIVATIZATION and the MARKET ECONOMY so much praised by the capitalists failed its test more than once."

And every time it gets up stronger then before. Even the craddle of socialism the old Soviet Union have now embraced the economic system that you seem so much to despise.

Joe Vella
Anything wrong with the government running business and getting income for the country's coffers to help the not-so-well-off and have reserves for the needs of the country when dire situations such as that we are in now happen?

The privatization policy of which I have no doubt that you are a follower, all the Governments are nationalizing or bailing out the private enterprises.

So why do the private enterprises make billions of profits on a yearly basis but when the going gets tough they ran to Papa Government to help them out?

Shouldn't it be that when the going gets tough the tough gets going?

This seems to be the present situation with all Governments making good for the private enterprises losses with the taxpayers money, but not with private enterprise.

What we are seeing now is the beginning of the worst recession since the 1930's and a repetition of the same event.

The only thing that can be concluded is that PRIVATIZATION and the MARKET ECONOMY so much praised by the capitalists failed its test more than once.

@ Muscat Pat

I am not saying that everything in the EU and in the EURO Zone is all honey and sweet as you are suggesting.

I am simply pointing out that in all, countries in the EU so far have burdend the recent international economic crises better, Yes there are countries in the EU and in the EURO zone that are not in a recession at the moment.

I am not trying to sell you anything my friend. Even your Joseph Muscat now agrees that Malta's place is in the EU.

@ Lawrence Martinelli

You ask, I answer.

"Scandinavian countries in recession ?"

Yes offficially they all are wiht the exception of Finland. The only Scandinavian country that is in the EURO Zone.

"From what I understand..... NOW every country IS in recession."

Wrong, among other countries that are not ina recesson at the moment you will find France and Malta.

"For your information Finland ( the most efficient & wealthy of EuroLand)
the debate is on there.....strong opposition to the Euro.....verging on withdrawl."

I doubt it.

"Norway ?.....not even part of the E.U."

All I said that it was not in the EURO Zone. But thanks for remind me, you proved my point. That countries in the EU overall are weathering the International crises better.

"What was wrong with the Malta Lira ?......."

The question is what the value of the Lira would have been under the curent circumstances if Malta had not entered the EU. I suggest it would had depriciated much morer then the 10% suggested by Alfred Sant.

@ Joe Vella
Your arguments are based on one simple fact; inside the E.U everything is A1; outside the EU everything is D4! But the real world has a lot of grey matter, which you simply try to ignore. For example, Germany is in recession, even though it is in the EU and the Eurozone. Italy as well, so your arguments do not hold. You continue to sell us the lie that in the EU everything is heaven on earth. No, dear Mr Vella it is not. Neither it is hell. It is more heaven + limbo and purgatory...sometimes a bit better sometimes a bit less. And what makes us SMART Europeans in Malta, by accepting everything with a wink and a nod? No, we have to debate and call a spade a spade, and not try to be lackeys to gain " local" political milage. So are we in recession? Hopefully not, but we need a lot of luck and good hindsight to miss it.

@Joe Vella

I never instigated the PN in my comments but I stated facts. We cannot be evasive. It is the people's right to know the real situation and not play around with technicalities.

@ Joe Vella.

Just for your information I am not MLP !!!!!!!
Please note that there are also PN's who feel the nasty situation we're living in.

@ Paula Chectcuti

I am not shifting responsibilites. We all know that the government has to perform. Nothing to discuss about that. However, in todays democracy you now very well that the government can only influence up to a cetain extent. It is a very well know fact that the MLP& GWU is injecting dramatic fear into everyone which can backfire on the Maltese economy. People will stash away their money after hearing a Muscat or Tony Zarb speech, and that is when a recession officially starts. This has happened all over the world. Dont see why Malta is different.

@ Joe Micallef

I think that the PN is used to getting criticism. The good news is that Gonzi has constructively used the criticism whenever possible. MLP was never able to cope with criticism, not even internal criticism. Just listen to Marlene in last Xarabank and you will see a similar tactic employed by all MLP representatives were they try to shut their opponent up when the talk starts to get technical and they have no clue of what to say.

If Europe is in recession, then Malta goes into recession.
Who do you think supports the Maltese economie. Tourist and European consumers.
The worst of this credit crunch is still to come in 2009. Watch for another crash when the US dollar collapses late 2009.

Would we really expect any less from the Governor of the Central Bank who would be better advised to address why our banks do not always apply the full interest rates cuts from the ECB ,of which Mr.Bonello is a member,and take their time about introducing any such reductions.Also it would be interesting to learn how the MCB Governor is in direct opposition to the ECB who advised that ALL the Eurozone countries are now OFFICIALLY in a recession.How does he define a recession?Is it perhaps when your neighbour loses his/her job but not you?

Reminds me of John McCain who kept insisting, during his unsuccessful campaign, that the US economy was solid!!!! No wonder Obama won.

@ Joe Vella,
Scandinavian countries in recession ?
From what I understand..... NOW every country IS in recession.
For your information Finland ( the most efficient & wealthy of EuroLand)
the debate is on there.....strong opposition to the Euro.....verging on withdrawl.
Norway ?.....not even part of the E.U.
Denmark & Sweden ?......the best Social Security systems around.
The Euro is in the hands of Herr Hauptmann in Frankfurt.
What was wrong with the Malta Lira ?.......Malta Heritage Views....less attractive than
EuroLand drab Arches , Bridges & other fantasy inventions ?

What else could he say. He cannot say that Malta is in recession because it would have tremendous influance for some foreign investors decisions. I assure they are reading and listening. Everyone knows that this crisis will have an impact to any economy because of globalisation but some of them will defend.

@ L Galea

Governments are not there to run businesses. Period.

@ J. Mizzi

Typical MLP and Socialist tendencies, in hard times they throw the towel, they give up. When is the MLP going to learn that even in times of hardship there are opportunities to take advantage of.

No recession--what about inflation..you know one comes after the other, ask the families who have to fork out from their pockets, and not get their utilities covered by some firm or organization.

Karl Abela,

Give us a break.

We all have our wits about us thank you very much.

Or is your party incapable of accepting criticism?

What annoys me most with the Blue Goblins of Joe Vella and Karl Abela is the fact that they try to sort out things which the Government has failed upon or is telling half truths, with those who read these comments.

Their Net News is already giving out hints that the Euro zone is in a total recession. This makes the Government's reasoning incorrect as it is not true that Malta is still out of recession due to the Euro currency.

The truth is that up to now Malta has survived the financial crisis due to all precautions taken regarding the bank's reserves and liquidity ratios. The Euro song is to be stopped immediately. It is another bubble which has just exploded in the face of the Nationalists' party who are now very worried about how they are going to face the country with the truth!

Karl Abela is shifting the incompetence of the Gonzi government onto Joseph Muscat. If MLP seems to be negative for you, I prefer Dr.Muscat's warnings rather than the Prime Minister's superficial words. It is not Dr.Muscat who is governing; Lawrence Gonzi needs to carry out his duties properly!

@ J. Mizzi

The funny part is that the MLP were never in square one. In other words there is no hope for the MLP.

@ Karl Abela

Do up really expected anyhting better from The MLP, The GWU and the cheering bunch made of from little elves. Afterall, when Malta was faced with unemplyment, the MLP and GWU response was to creat Korpi tax- xoghol which Malta is still carrying some of the burden todate. Employment that does not contribute anything to the GDP which is needed to sustain the social fabric.

Those who say we are not in recession ask all the businesses who have seen a drastic reduction in their turnover for quite a long time.

Joe Vella
If the dockyard workers can be gainfully employed, why did the PN Government not employ them gainfully? Are we to believe that the private sector can manage the dockyard and the Government cannot?
If this is so, no wonder why Malta is in such a dire situation.
If the PN Government can't manage the dockyard imagine how it can manage the country!
So then let's privatize the Government to make it efficient.

p.s. Why do we need a Central Bank with the Governor at a fantastic tax-free salary at all since all decisions are taken by the ECB and we don't have any say in them?

Privitisation is no good anymore. Mela mhux qed taraw x'hinu jigri?
Governments all over the world are bailing out Banks, Automakers, Insurance....and all of this with peoples money.
We're back to square one!!!

What ammuse me most with the little Elves is that statistics are ok when they are trying to make their point; but when others do the same they take offence and all the little elves tell us that statistics are lying.

Words/attitude used by MuscatMLP = Negativism, pessimism, failure, makku, se jikluna, etc, etc.
Words/attitude used by GWU = carbon copy of the above.

Words/attitude used by Gonzi PN = stinkaw, success, kuragg, harsu l-quddiem, sfidi godda, ngibu l-pajjizna l-quddiem, ghandna biex niftahru, flimkien kollox possibli etc etc

Economists will tell you that a recession is started by good or bad news which will create a good or bad atmosphere. A positive vibe in the country will boost the economy and circulation of money. It’s a fact.

Looking at the above, it’s not rocket science to see who is creating a rotten atmosphere in our beloved country.

If our country enters into a recession Muscat will be the prime cause for this.

Now start givng me the abuse.

@ H. Mizzi

The proper term is decrease in the GDP in 2 consecutive quarters and not decrease in economic avtivity for 3 consecutive quarters as you stated.

There is a lot of hot air being said these days, but the latest statics realeased earlier this week shows that month over month more Maltese traveled abroad. I am not saying that there is no effect at all, but rather one must take everything with a grain of salt and not believe every idioma that is thrown at him.

@ Lawrence Martinelli

Why don't u base your points on factual information?

FYI, from all the Scandinavian Countries only Finland have not fallen into recession todate. Guess what! Sweden, Norway and Denmark do not belong in the EURO Zone, Finland does.

It is a fact that those Countries in the EURO Zone were better prepared for the recession.

@ effie carbonaro

The dockyard have not been sold yet, they are in the process of being privitises. I, for one cannot wait till the privitisation is complete cause it only means one thing - More Foriegn Investment coming to Malta and former shipyards workers can now be gainfully employed and not a drain on all taxpayers.

Perhaps you want to entertain us and tell us since when the MLP have started to champion the causes of Property Dealers?

What else could the Central Bank of Malta's Governor say ........?
In a twisted way the financial crisis has help hide the truth about the Euro.
Of course Mr. Sant was right .
But the " heaven on earth " Euro temptations dished out was great.
EuroLand tourists & accessories would flock to Malta.....no need to change currency !
One main ingredient of a tourist is to look at the local currency......instead now it's
immaginary bridges castles & other structures all over......immel sauer kraut !
Business ? It appears that E.U. countries not using the Euro fared better.
For Malta's sake I hope the bubble will not burst.

Technically to be in a recession the country has to register a decrease in economic activity for 3 consecutive quarters. OK maybe this has not happened yet, but all one has to do is to talk to businesses, and hear at first hand their reaction. Everyone is reporting a general slowdown which will evidently lead us into a recession very soon. The water and electricity tariffs will only make things much worse as more money will be chanelled to the government coffers instead of kept in peoples pockets to spend on needs of everyday life and more. The government will only fast track the recession if he keeps insisting on the increased tariffs. It seems that everyone understands what is going to happen except our intelligent ministers in government.

EU slides into recession (cnn.money.com)
The combined economy of the 15-nation euro zone has shrunk for the second consecutive quarter for the first time since its inception.
• Euro-zone economy falls into recession

Dear Governor, Mela issa m'ahniex fl-europa? m'ahniex global?...jew kollox falla?

it appears that most commentators here prefer to read part of the statement and not all of it.

recession is a technical economic term with a clear definitionand the governor is correct in saying that Malta is not in recession. Whether it will be I am not qualified to say . A recession is two consecutive quarters of 0% economic growth. There is only one definitionof recession and it is not to our own individual way of defining it.

Yes, it does not mean that economic growth does not slow down, despite the fact that it is nto a recession. many of the commentators are making that point and rightly so.

But so did the governor of the central bank himself by saying that an external recession will have and is having a negativeimpact of local economy

so actually, all are agreeing with what he said in th end.

Governor Michael Bonello, please stop insulting us .
Do you think that the people outside are stupid ???
lets wait for the first bills and then let the people decide if malta is facing the recession.

Technically we are not in a recession as till now the economy is still growing. In reality we are in a recession

It s very reassuring to hear that we have no recession in malta, this is probably due to the numerous experts we have who are clearly in control of the situation.

It is indeed lucky that unlike the USA, Germany and the rest of the world we have such people by our sides.

Now where did i put down my Beano.................

No recession in Malta.hotels have more staff than tourists,manufacturing firms are in the verge of sending off a lot of their workers,the shipyards have been sold,the self employed are feeling the credit crunch,property dealers have seen a tremendous slowdown in property selling and to seal all these the uncontrolable budget defecit.No recession in Malta

If you had watched the parts of the interview its clear that the Central Bank Governor wasn't feeling so much comfortable to reply to some questions and had just a generic answer to them! Strange attitude when there no recession in Malta! I asked the Governor again or other experts: Are the people coping at the end of the month as we use to say ? As from the question asked if people are coping with their debt (not including home loans cause their if you don't pay you are homeless!) the Governor reply was very close to a NO! In this context how much is good to add more expenses to families monthly budget ? I respect Mr. Bonello view not to panic people and not to press on big heads toes but please lets call a spade spade! Thank you

'No Recession' is one technical way of playing with reality. Businesses are suffering a drammatic slowdown and generally speaking sales have gone down by 50%. Are we too afraid to tell the people the truth? I've been to both banks this week (I intend the major banks) and they confirmed that there is hardly or no activity at their business centre. Instead of saying 'No Recession' I would change that to 'No Money'.

WOT? No recession?

Workers are losing their jobs or losing their normal income everyday because their company are in a bad state caused by international crisis. so is it ; so far or Hal Far ?

Yes maybe Malta is not in a recession but households are in a recession. There is a low cash flow and some businesses are working on half the cash that used to work on a year ago. Unfortunately there seems to be no current statistics to show how businessare coping with the current situation. Besides let me ask. How much money have the Maltese lost through their foreign investment ( ex. funds, mutual funds, stocks , shares etc) in the past year?

The recession is already wih us. If you visit and talk a small traditional grocer they will tell you that their customers are already spending less. Malta needs to re generate itself as was done in past recessions. In my opinion Prime Minister Eddie Fenech Adami did a great job in this term. Our politicians needs to be wise enough and do this once again. But to say that the recession has not reached us....... I fully disagree.

is-sur bonello ghandu jara li l-banek maltin kollha jaghddu t-tnaqqis kollu ta nofs punt percentwal lill-klijenti li sselfu minaghndhom kif indikat mis-CBE

That's because the public has not yet received the first utility tariffs.