The economy grew by 2.9 per cent in real terms in the second quarter of the year - a growth rate which was faster than most of the EU countries but slower than the previous quarter.

The NSO said GDP for the second quarter amounted to €1,897.8 million, an increase of 4.2 per cent over the corresponding period last year. In real terms,
GDP went up by 2.9 per cent.
 
The Production Approach
During the second quarter, growth in gross value added was mainly generated by public administration and defence; education; human health and social work activities; wholesale and retail trade; transportation and storage; accommodation and food service activities. Negative growth was registered in manufacturing, electricity and water supply.

The Expenditure Approach
Total final consumption expenditure in nominal terms increased by 4.8 per cent. In real terms, total final consumption expenditure went up by 3.7 per cent. Gross
fixed capital formation increased by €26.3 million in nominal prices and by 14.7 per cent in real terms. Real exports increased while real imports decreased (Table 2).

The Income Approach
Compared to the corresponding quarter last year, GDP at current prices went up by €76.2million, with an increase of €52.4 million in compensation of employees, a €13.2 million increase in gross operating surplus of enterprises, and a €10.5 million increase in net taxation on production and imports.

Gross National Income
Considering the effects of income and taxation paid and received by residents to and from the rest of the world, Gross National Income (GNI) at market prices for the second quarter was estimated at €1,828.2 million, the NSO said.

Finance Minister's reaction

In a reaction, Finance Minister Edward Scicluna said  Malta ranked among the top-performing countries in the Eurozone and the European Union on GDP growth.

In nominal terms GDP grew by 4.2 per cent. This nominal growth, he said, was expected to continue impacting favourably Malta's public finances especially its debt and deficit positions.

Compared with figures published as part of Eurostat’s Flash Estimate for the second quarter of 2014 on 14th August 2014, Malta ranks as the sixth  top-performing country out of the 28 European Member States, and the second top-performing country (after Latvia) out of Euro Area countries.

“This successful and encouraging rate of economic growth was the result of considerable increases in private consumption and investment,” Prof. Scicluna noted.

During the second quarter of this year, total compensation of employees increased by €52.4 million. As a result there was an annual increase in compensation per employee of 4.5 per cent. There was also a considerable increase in profits and operating surpluses of businesses of €13.2 million during the same period, he said.

For the first half of this year, compensation of employees increased by €95.6 million with the most notable increases recorded in the construction; professional, scientific and technical activities; and wholesale and retail trade, sectors. During the same period, profits and operating surpluses of businesses increased by €33.5 million.

PN calls for detailed analysis of the figures

The Nationalist Party noted that much of the economic growth stemmed from government spending, not productive private sector investment, and it wondered for how long the current situation could be sustained.

While several sectors had contracted, public administration accounted for 35 per cent of the GDP growth. This was evidence of how the government was trying to hide the government’s problems.

The figures also showed that more than half of the increase in wages came from government salaries, paid by taxpayers.

While the government was already boasting about the figures, a closer analysis should be cause for concern as the governemnt was only seeking short-term solutions for problems in other sectors  such as manufacturing, which had again declined.

The statement was signed by Mario de Marco, spokesman for economic affairs and Tonio Fenech, spokesman on finance.

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