Minister confident of Malta's response to economic crisis

Malta was not immune to the international financial problems but the "prudent" work being done by the authorities should bear fruit once the world started to emerge from the downturn, Finance Minister Tonio Fenech said yesterday.

"Evidently, we cannot assume that the Maltese economy is not feeling the international impact," he said, reacting to official statistics showing that the economy entered into recession in the last two quarters of 2008.

However, Mr Fenech said, the economy was still "quite stable" and the government's prudent work should reap positive results when the world economy started to recover.

"It is imperative to help companies to invest now since this would allow us to be better prepared to come out of this situation," he said. He was speaking at a press conference in which he announced an agreement with sink manufacturer Stainless Steel Products Ltd which, as a result, will go back to normal working hours from a four-day week.

Similar deals had been reached with O-rings producer Trelleborg and the switch-maker Methode Electronics, leading new investment in their respective production lines.

Figures released by the National Statistics Office this week showed that the economy contracted in the third and fourth quarters of 2008 after registering growth in the first half of the year. And, yesterday, export figures showed a steep drop over the same month last year.

Asked for his reaction, Mr Fenech said the fact that production levels in local companies were down meant that their export figures were also down.

Incoming tourism has also declined following a record first seven months in 2008 although the Maltese themselves are still travelling a lot. Outgoing tourism actually increased from 18,398 in January 2008 to 19,754 last January, according to figures out yesterday.

Mr Fenech said the country had faced problems in similar crises when, even after the recovery had started, it took some time to attract companies back to Malta.

"If the government had said there was nothing to be done at the present time and that it would try to attract companies once the storm is over, more time would have to go by before we would be able to bring companies back to the island," he said.

Instead, attempts were being made to help factories withstand the storm and invest in their local production so that positive results could be felt as soon as the global economy started improving.

Over the past two days there has been a glimmer of hope that the world economy could see a turnaround after months of financial turmoil following reports of an improved performance by Bank of America, Citigroup and JPMorgan Chase.