Minister says economy may remain in negative territory this year

Finance Minister Tonio Fenech acknowledged this morning that the Maltese economy will for the rest of this year either experience zero GDP growth or slide into negative growth of up to -0.9 percent.

The economy was already in negative growth in the last quarter of last year and the first quarter of this year.

Mr Fenech was speaking after a meeting with the social partners which kicked off the consultation process ahead of the Budget for 2010. The Budget will be preceded by the pre-Budget document in mid-July.

The minister said that while Malta was being buffeted by the economic crisis, it was faring better than most other European countries which were experiencing negative growth of -4%.

This, however, was a delicate time for the Maltese economy, and one had to be careful to present a balanced budget that did not cause disturbance. Unless the economy was given the conditions to grow, other sectors such as social services could not be addressed.

Mr Fenech said the social partners had called for investment in Product Malta, measures to tackle inflation, reduce bureaucracy and raise productivity.

When he spoke on tourism, Mr Fenech said this sector was experiencing uncertainty because of late bookings, and as a result hoteliers and other operators were not committing to engaging staff for the summer.

The minister said unemployment had increased by 1,000 over last year, but had now levelled out.