The government's economic analysts believe the economic situation in the eurozone will get worse and we can expect further quarters of negative GDP growth, probably until the third quarter of 2009, Finance Minister Tonio Fenech told The Times Business.
Last Friday the eurozone officially slipped into recession after figures showed that the economy shrank by 0.2 per cent in the third quarter. This followed a 0.2 per cent contraction in the 15-member bloc in the previous quarter from April to June. A recession is defined as two consecutive quarters of negative economic growth.
Many analysts believe the eurozone has not yet had the full impact of the credit market crisis which is why further negative growth is expected.
Mr Fenech said: "The international economic turmoil and uncertainty have placed a big responsibility on this year's national budget of giving a specific impetus to our economy in order to secure jobs. During the last few weeks we have seen a significant number of job losses. The UK is approaching one million unemployed, and some economists have predicted that this figure will rise threefold in the next two years. Job cuts are happening everywhere."
He added: "So it is clear that the international financial crisis will impact the world's economy negatively. The crisis is affecting the availability of credit to businesses, income levels of households around the world, leading to less purchasing power and therefore demand for goods and services, with less sales to business, less orders, less jobs. The car industry is a perfect example: less demand for cars, less demand for car parts."
Asked how the government is going to try and lessen the impact of the eurozone's recession on Malta, Mr Fenech said: "Like many other countries around us we have embarked on an investment programme that helps us support economic growth and jobs, while recognising the need that this is done in a sustainable manner and within our social responsibilities.
"A perfect example is tourism. We know that less money in people's pockets around the world will mean that people will travel less. But some people will still travel. So we need to sustain the demand for our tourism product and that is why we are investing heavier in our marketing efforts," he said.
Mr Fenech said the government will continue to support research and innovation, and help industry and enterprises find new markets. He also promised to support start up companies. "That is why we have launched an investment programme in infrastructure and incentives of over €40 million for the coming three years," he said.
The news about the eurozone's recession came a day after Germany, the EU's largest economy, officially declared it was in a recession. On Thursday figures showed the German economy contracted 0.5 per cent in the third quarter, following a 0.4 per cent drop in the quarter before.
The announcement about the eurozone's recession coincided with the news that Italy also entered a recession in the third quarter, with the economy contracting 0.5 per cent from the second quarter when it shrank 0.3 per cent.
The UK is on the brink of seeing its economy shrink with a Bank of England forecast suggesting that the country is already in recession and the economy is likely to continue to contract well into 2009.
Spain's economy shrank in the third quarter, the first such contraction since 1993. Many observers believe that the country's property crisis will push the economy into recession next quarter.
France, however, a leading member of the eurozone, witnessed an economic growth of 0.1 per cent in the third quarter this year.
The members of the eurozone are Germany, France, Italy, Spain, the Netherlands, Belgium, Ireland, Luxembourg, Portugal, Cyprus, Slovenia, Greece, Austria, Finland and Malta.
According to a panel of economic forecasters the US economy is already in recession, and is set to shrink at a pace of 2.6 per cent in the fourth quarter. The US economy contracted at an annual rate of 0.3 per cent from July to September.
On Monday, Japan became the latest economy to fall into recession - reporting a second successive quarter of negative growth.
Last Friday the eurozone officially slipped into recession after figures showed that the economy shrank by 0.2 per cent in the third quarter. This followed a 0.2 per cent contraction in the 15-member bloc in the previous quarter from April to June. A recession is defined as two consecutive quarters of negative economic growth.
Many analysts believe the eurozone has not yet had the full impact of the credit market crisis which is why further negative growth is expected.
Mr Fenech said: "The international economic turmoil and uncertainty have placed a big responsibility on this year's national budget of giving a specific impetus to our economy in order to secure jobs. During the last few weeks we have seen a significant number of job losses. The UK is approaching one million unemployed, and some economists have predicted that this figure will rise threefold in the next two years. Job cuts are happening everywhere."
He added: "So it is clear that the international financial crisis will impact the world's economy negatively. The crisis is affecting the availability of credit to businesses, income levels of households around the world, leading to less purchasing power and therefore demand for goods and services, with less sales to business, less orders, less jobs. The car industry is a perfect example: less demand for cars, less demand for car parts."
Asked how the government is going to try and lessen the impact of the eurozone's recession on Malta, Mr Fenech said: "Like many other countries around us we have embarked on an investment programme that helps us support economic growth and jobs, while recognising the need that this is done in a sustainable manner and within our social responsibilities.
"A perfect example is tourism. We know that less money in people's pockets around the world will mean that people will travel less. But some people will still travel. So we need to sustain the demand for our tourism product and that is why we are investing heavier in our marketing efforts," he said.
Mr Fenech said the government will continue to support research and innovation, and help industry and enterprises find new markets. He also promised to support start up companies. "That is why we have launched an investment programme in infrastructure and incentives of over €40 million for the coming three years," he said.
The news about the eurozone's recession came a day after Germany, the EU's largest economy, officially declared it was in a recession. On Thursday figures showed the German economy contracted 0.5 per cent in the third quarter, following a 0.4 per cent drop in the quarter before.
The announcement about the eurozone's recession coincided with the news that Italy also entered a recession in the third quarter, with the economy contracting 0.5 per cent from the second quarter when it shrank 0.3 per cent.
The UK is on the brink of seeing its economy shrink with a Bank of England forecast suggesting that the country is already in recession and the economy is likely to continue to contract well into 2009.
Spain's economy shrank in the third quarter, the first such contraction since 1993. Many observers believe that the country's property crisis will push the economy into recession next quarter.
France, however, a leading member of the eurozone, witnessed an economic growth of 0.1 per cent in the third quarter this year.
The members of the eurozone are Germany, France, Italy, Spain, the Netherlands, Belgium, Ireland, Luxembourg, Portugal, Cyprus, Slovenia, Greece, Austria, Finland and Malta.
According to a panel of economic forecasters the US economy is already in recession, and is set to shrink at a pace of 2.6 per cent in the fourth quarter. The US economy contracted at an annual rate of 0.3 per cent from July to September.
On Monday, Japan became the latest economy to fall into recession - reporting a second successive quarter of negative growth.