Ivan Camilleri, Brussels
Fragile economic recovery expected
The worst effects of the global recession on Malta's economy are almost over and the local economy should be able to see some economic growth next year, although at lower levels than usual.
According to economic forecasts unveiled yesterday in Brussels, GDP is expected to turn to the black once again in 2010, following a 2.2 per cent contraction expected this year.
This "fragile economic recovery" will come through increased private and public consumption and better results in trade flows where both imports and exports are expected to rise marginally. According to Brussels, this will help the island sustain job creation and stem the rise in unemployment.
On the other hand, Brussels is predicting that, in 2010, inflation in Malta will remain higher than the euro area's average, the construction industry will underperform and wage growth will exceed productivity with the risk of reducing Malta's competitiveness.
When compared to the rest of Europe, Malta's economic performance is better than many of its partners.
The euro area is expected to register a GDP contraction of four per cent this year (2.2 per cent in Malta) while unemployment stood at 9.5 per cent (7.1 in Malta). On the other hand, inflation here remained higher than the average in the 16-member euro area.
According to the Commission's economic analyses, issued twice annually, Malta's economy in 2010 is expected to register a 0.7 per cent growth, the same as that predicted for the euro area. However, the Commission said that "the scope for a quick turnaround appears limited".
"Economic activity is projected to gradually improve in 2010 and 2011, although growth is set to remain below historical trends," the Commission states. Between 2005 and 2007, Malta registered average GDP growth of four per cent.
According to the Commission, 2009 was the year in which Malta's economy had to face the effects of the global recession.
"Private consumption is set to contract in 2009 due to lower real disposable income stemming from rising unemployment and slower wage growth."
The controversy on the cost-of-living-adjustment (COLA) mechanism was also dealt with by Brussels. In fact, the Commission appears to agree more with those who want wages to rise according to productivity.
"Despite the contraction in output, nominal wages continued to accelerate in the first half of 2009 compared to the same period in the previous year, which may jeopardise competitiveness," the report says.
"In addition, the cost of living adjustment in line with the high inflation registered in the past months is expected to entail nominal wage growth above the euro area average in 2010, although the relatively flexible private sector wages may limit this development."
10 Comments
Post comment
Please sign in or create your Account to post comments.
Deo Catania
Nov 5th 2009, 09:00
@ Patpitu Gianninu Saliba. How about your useless Gonzi giving explanations why everything in Malta is hopeless? VAT Dept, MEPA, Mater Dei waiting lists, ADT, Public Transport, Roads, Water/Electricity Tariffs, Illegal Immigrants...........imbaghad ejja peclaq fil-vojt. Titkelmu hekk int u ohrajn bhalek tipo Joe Vella ghax b'xi mod jew iehor tigwadanjaw taht il-PN. Dik l-unika raguni ghala xi hadd qatt jista jiddefendi gvern tal-misthija bhal dan.
Joe Vella
Nov 4th 2009, 16:40
@ Deo Micallef
It was Alfred Sant that was making promises to everyone under the sun; including cutting in half electricity and water tariffs in Half. Since you brought up and take offence to the Deficit Amount; may I ask you what the effect would have just this one proposal would have had on the Deficit?
Deo Micallef, Malta's debt should not be a concern to anyone. It is all held locally by Maltese individual investors and institutional investors. Unlike the debt of the '70's and the '80's where a good chunk of it was held by foreign investors because Maltese investors had no trust in the Government of the day.
The level of employment at the central Government have been going down year over year and the unemployment level had not shot up as u have said. The recent spike in unemployment is related to the World economic crises and World recession. Some 1200 of the 1500 former Dockyard workers have found prospective employment.
I guess you haven't seen the EU economic report just released lately where it stated that Malta unemployment rate is one of the lowest in the EU.
Gianninu Saliba
Nov 4th 2009, 14:05
So Mr. Deo Micallef believes that I wear blue blinkers because I believe what the EU experts are saying. Who does he expect me to believe? Surely it cannot be his beloved Joseph who was against EU membership, against Euro adoption, Against Privatization, against Free Trade, and... yes, against the SmartCity project, against the Marsascala plant, against the closing of the dockyard which was going through massive losses for the past fifty years, against everything the PN government proposed and at the same time in favour of Fredu's rejected policies. Mr Micallef, you do not wear red blinkers, your eyes are bloodshot, shame they are so red!!
deo micallef
Nov 4th 2009, 12:36
@ Joe Vella
Do not try to twist facts please, everyone remembers how the pn administration was dishing out goodies just before the last election, they told us that the worst is over and " we are harvesting the fruit"!!! During that time the whole world was very cautious because there were signs of a looming recession. Economists on foreign tv stations were talking about it all the time.
@ Gianninu Saliba -remove your blue blinkers, otherwise you will remain gullible for ever. How can you explain the heavy debts that this govt incurred?Is this a sign of good governance and an economic recovery when the deficit is shooting up again? Do you know that govt debt reached almost 4 billion euros? If the govt sheds the thousands of extra workers it employs I am sure that the unemployment figures will shoot up like crazy. It is not the amount of employed people which counts, but the amount of PRODUCTIVE WORKERS, and that is why those figures do not mean anything, unless you are wearing a set of blue blinkers of course. One last thing,our salaries are amongst the lowest in the EU !!
Joe Vella
Nov 4th 2009, 11:53
@ Stefan Modolo
If my memory serves me right it was Alfred Sant and the MLP that were promising everything under the sun, while GonziPN was telling us to be cautious because there was trouble looming over the horizon.
Gianninu Saliba
Nov 4th 2009, 11:52
So Stefan Milodo does not believe what the EU economists had to say about Malta, yet he believed his dear Fredu that he would reduce the Water & Electricity Levy by half. He believed Fredu that Labour were going to win the 2008 General Elections. No wonder that he believes baby Joseph that he will be Prime Minister in 2013. Dream on my friend, dream on.
Charles Muscat
Nov 4th 2009, 11:46
Why Malta always has to assume, predict the out come or hypothetical scenarios. I think Malta will be under water by the year 2015.
Stefan Midolo
Nov 4th 2009, 11:06
Only someone like Gianninu Saliba (below) will believe these forecasts. After all these were the same people who had forecasted that the recession would not make it through to Malta.
Albert Kitney
Nov 4th 2009, 11:02
@ Gianninu Saliba
I think you should better wait to see what will happen in 2010 before you talk ! Predictions and forecasts do not assure that Malta will be in any way be getting out of the economic crisis for sure. I think before we say who will be saying what to whom it is better to see what will really happen! Malta Should be working as a one whole Island and forget forever the political parties,whom are doing the damage to us all ! After all we Pay the government with our taxes to DO HIS JOB !! which is to run the Country on our behalf ! If I hire a person to do a job and pay him after wards dosen't mean that I am eternally great full to him, he did what he was paid to do, which a lot of times People and the PM forget.
Gianninu Saliba
Nov 4th 2009, 09:46
Come on Joseph, come on. Say something, say something please. The euro area is expected to register a GDP contraction of four per cent this year (2.2 per cent in Malta) while unemployment stood at 9.5 per cent (7.1 in Malta). This is not government propoganda this is the economic forecast from Brussels. Admit it Joseph and be honest by saying: "Well done Dr. Gonzi... aren't we all lucky that Fredu lost the elections". Come on Joseph speak up and admit the truth.