Friday, 3rd July 2009 - 11:49CET
Economy was like a car with two punctures - Fenech
The Maltese economy has just gone through the worst six months of recent years. It performed like a car with two punctured tyres, able to to move forward only slowly, Finance Minister Tonio Fenech told business leaders this morning. However, things could be getting better.
"There are a number of signs that the worse may be over, at least there is now more stability," Mr Fenech said, But the situation was still fragile, he warned.
Speaking at a business breakfast as part of the budget consultation process, Mr Fenech reiterated his forecast that 2009 could see the economy shrinking by 0.9 percent, which was nothing to be happy about, but was much better than most EU countries.
The minister gave an overview of the economy, pointing out that in the first quarter, exports dropped by 26%, imports of consumer goods were down by 12% and tourism registered a drop of 41,000 (13%).
Although unemployment increased by more than 1,000 over a 12-month period, the economy was still creating jobs and in the first quarter, the number of gainfully occupied increased by 1.8%. The EU 27 average of the gainfully occupied showed a drop of 0.8%.
Mr Fenech said that the fact that inflation was above the EU average was a source of concern, although, he said, the higher utility tariffs were a major contributory factor.
Priorities of the budget had to be sustainability and competitiveness including jobs, investment, tax policy, fiscal sustainability, education and skills, public service reform, research and innovation,
During the activity a number of suggestions were made by those present.
George Schembri, CEO of of the MHRA, said the sector did not wish to see any major jolts as had been the utility tariffs last year. He reiterated the association's disagreement with the planned 50c levy per tourist per night from next year, even if it was delayed. He called for funding allocations for all-year-round marketing.
Vince Farrugia, Director-General of the GRTU, called for more coordination between ministries and insisted that regulators needed to have performance benchmarks which were transparent and accessible.
Joe Farrugia, director general of the Malta Employers' Association called for a reform of the Cost of Living Adjustment (COLA) mechanism, insisting that in such difficult times, labour costs could not increase in a blanket way with no regard to productivity.
Grace Attard from the Council of Women spoke on the need to extend maternity leave as a means to encourage more women to work.
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Comments
If our engine, (that has still managed to create 1.8% new jobs, and our downturn is just 0.9%). has ceased, what has happened to other economies that lost 5% jobs and have a 5-6-7% economic downturn?
1 key figure
Average EU downturn 4%
Malta downturn 0.9%
The Euro is perceived as a safe currency, therefore it cushions jolts to the economy brought about by recession. That is why 'mighty ' Britain is actually thinking of joining: http://www.telegraph.co.uk/news/worldnews/europe/eu/5506385/Britain-will-obviously-join-euro-says-Mandelson.html. But then what does Mandelson know about these things.
The car has been running on two punctures for years now. Most on board know and in fact that's what they were shouting out at you with the resultS of the last electionS.
Our trouble is that the drivers did not believe the passengers and have kept on going and doing further damage. You yourself said a few months ago that all was well. You are even saying now that we were hardly hit by the recession when this is not yet over.. We are getting tired of hearing you admit mistakes all Maltese have been telling you about for years. I'm afraid you have gone past your use -by date. Please resign for fresh approaches to materialise.
Give back Malta's Central Bank the Malta Lira.
Malta broke with sterling and did not fair too badly.
The Euro AND the EU. are not going to solve ANY Malta problems.
Malta can be a central point for Middle East and Asian trade,
suitable as a < Free port > for international trade.
The Euro is a straight jacket unsuitable for ( luckily ) Dwarf Malta.
And how did Tonio Fenech stimulate the local economy? Is it by increasing the water and electricity by 185%? Is it by increasing ( again) the price for heating oil and cars? Is it by increasing the deficit to a new record high before the elections ; months before the credit crunch started? Add to this the 4.0% inflation- which is the highest in Europe- and you get a 4% erosion of the salaries.! Some stimulation of the economy this was!
the massive decreases in exports and imports/tourism etc only means that there is less going into government coffers
unfortunately our government does not have the ability to curtail its cost while the economy is receeding so the only way to recover lost ground will be higher taxation in one form or another
... Demand for a product is very much linked to marketing....why should the workers suffer, if their marketing/selling departments do not manage to sell their product ? Where do you draw a line on which jobs are more productive than others? - 0 our of 10 for Joe Farrugia's line of reasoning.
4-Why is it that the Malta Employers Association, the GRTU, The MHRA are always consulted about budgets BEFORE the workers' representatives (like GWU/UHM/CMTU ect)?
This way of consultations frequently presents the workers representatives with a fait accompli' rendering their consultations nothing but an expercise in P.R. - 4 out of 10 for the way such consultation process takes place.
Allow me to make an effort to try to be as objective as is humanly possible for a middle class worker, and comment on this article.
1-Yes Dr. Tonio Fenech deserves credit and praise for passing us throught the worst economic crisis of recent history with the least possible damage. I had expected worse. BUT I WAS FULLY AWARE OF THIS LOOMING CRISIS EVEN DURING THE ELECTORAL CAMAIGN DURING WHICH HIS PARTY WAS MAKING IMPOSSIBLE PROMISES. 9 out of 10 for minister Fenech.
2-Reform in the Public Service has been in the government's priority list since 1988 and apparently it is still in the making ! The visible progress has been too slow during the past 15 years. 1 out of 10 for the past and present PN governments on this.
3-The director general of the Malta employers assosciation is fully aware that our inflation rate is above the EU average, and yet he wants to tie our wage increases with productivity. What about those jobs who are unrelated to productivity ? What if the demand of a product is low ? Why should the worker suffer if there are few orders for the pruduct that he produces?