The country should consolidate existing business, speed up reforms and go for short-term economic boosters in order to tackle the eurozone's impact on Malta, economist Gordon Cordina told The Times Business.
Dr Cordina said the eurozone's recession will have an impact on major operating sectors and on new investment in Malta "because Malta is not entirely geared to serving niches which are immune to business cycle fluctuations".
He said: "I would consolidate existing business rather than attract new investment in this difficult stage, mainly by enhancing efficiency and cutting costs of operating in Malta, speed up much-needed structural reforms, especially in welfare and education, and rely on short-term economic boosters such as construction and new tourism routes, but with an eye on long term sustainable development."
Dr Cordina said the European Central Bank was possibly too geared on the long run stability of the value of money, hence being anti-inflation, and not so much on sustaining the stability of economic growth against cyclical fluctuations.
"Excessive activity fluctuations could be detrimental to long run performance as much as losses in the value of money. And excessive fluctuations could themselves undermine a currency. We'll have to re-think a lot of economics from now on, and hard," he said.
The eurozone officially slipped into recession two weeks ago 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. Italy and Germany are already in recession and many economists believe Britain and Spain are on the brink of a recession.
Finance Minister Tonio Fenech had told The Times Business that 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.
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.
Dr Cordina said the eurozone's recession will have an impact on major operating sectors and on new investment in Malta "because Malta is not entirely geared to serving niches which are immune to business cycle fluctuations".
He said: "I would consolidate existing business rather than attract new investment in this difficult stage, mainly by enhancing efficiency and cutting costs of operating in Malta, speed up much-needed structural reforms, especially in welfare and education, and rely on short-term economic boosters such as construction and new tourism routes, but with an eye on long term sustainable development."
Dr Cordina said the European Central Bank was possibly too geared on the long run stability of the value of money, hence being anti-inflation, and not so much on sustaining the stability of economic growth against cyclical fluctuations.
"Excessive activity fluctuations could be detrimental to long run performance as much as losses in the value of money. And excessive fluctuations could themselves undermine a currency. We'll have to re-think a lot of economics from now on, and hard," he said.
The eurozone officially slipped into recession two weeks ago 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. Italy and Germany are already in recession and many economists believe Britain and Spain are on the brink of a recession.
Finance Minister Tonio Fenech had told The Times Business that 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.
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.