Marginally negative growth forecast
'European Commision working closely with EU member states'
Malta is likely to end the year with a marginally negative growth rate, according to Central Bank Governor Michael Bonello.
This latest revision comes one month after the Bank revised Malta's gross domestic product growth forecast to between 0.5 and 1.1 per cent.
Mr Bonello said the GDP growth was being revised downwards to take account of the further deterioration in external conditions since then.
Everything suggested that, barring unforeseen developments, this year would end with a marginally negative growth rate, Mr Bonello told a conference organised by Finance Malta yesterday.
Figures issued yesterday by the National Statistics Office showed that the shortfall between the government's revenue and expenditure increased by €27.1 million, bringing the total deficit to €235.8 million.
Reacting to Mr Bonello's prediction, Finance Minister Tonio Fenech said this was also mirrored by the downward prediction of the European Commission.
"We appreciate this news reflects the international reality we are all facing. Instead of standing still, we are working to counter it, not just in the immediate term but in the long-term so that jobs are not lost as a result of the international scenario," Mr Fenech said.
"We are working to create employment opportunities and continue attracting as much investment as possible. We cannot deny the figures but we will continue looking forward," he said.
Mr Bonello praised the financial services industry for its development, adding the ingredients all seemed to be in place for this industry to continue to prosper in the future.
Prime Minister Lawrence Gonzi also had words of praise for the performance of the financial services sector - a major pillar of the Maltese economy - which grew by "an impressive" 30 per cent over the past three years, employing more than 7,000 people.
Dr Gonzi said his government's vision was to see the industry's contribution to GDP climb from 12 to 25 per cent over the next six or seven years.
The EU Commissioner for Trade, Catherine Ashton said this year would see a decline in trade growth. The good news, she said, was that the global economic scenario made financial systems "wobble but not fall over".
To counter the effects, member states had to concentrate on the EU's most important asset, the single market, and ensure firms were competing fairly.
She said the European Commission was also working closely with EU member states to implement the growth and stability pact.
Baroness Ashton said the Commission was preparing a proposal for the creation of financial supervision, which it planned to present to the council next month. This, she said, would be a partnership between supervisory bodies in individual member states and the EU's supervisory authority.