The Malta Chamber of Commerce, Enterprise and Industry welcomed Fitch’s report on Malta but said this did not give the country reason to become complacent about its economic performance.

It noted in a statement this morning that Fitch itself acknowledged that Malta’s rate of economic expansion was generally attributable to domestic demand.

This was in itself a note of caution as domestic demand on its own could not sustain long-term growth for the country.

Lasting economic growth needed to be driven by export-led activity and this required the country to be competitive.

It noted that the recently published pre-Budget document stated that in the first half of the year, Malta’s main productive sectors recorded negative gross value added contributions to the economy.

The Chamber said official industrial production data for July recorded a significant drop when reviewed over a one-month or 12-month basis. And Malta slipped six places in the World Economic Forum Competitiveness Rankings published last week with Malta scoring weakly in terms of ease of doing business (business start-up procedures), innovation, labour market efficiency and certain aspects of infrastructure including roads and electricity supply.

Another recent country report on Malta – released earlier this month by the European Commission, remarked that productivity growth in Malta had lagged behind the euro area average over the past decade.

The Chamber noted Fitch’s warning about Enemalta and the risk the entity posed on the country’s fiscal performance. The agency stated that the reduction of commercial energy tariffs in March 2015 added to the risk.

“In light of the fact that Maltese business is burdened with the second highest energy tariffs in the European Union where the average rate is approximately half of that prevailing locally, the Malta Chamber hopes that the risk being taken by the authorities is a calculated one.

“This is because Malta’s export competitiveness cannot afford anything less than what was pledged by this Government prior to taking office.

“In fact, even with an average 25 per cent reduction as promised, industrial electricity rates in Malta will remain substantially higher than those applicable, on average, in the EU which, in turn are more than 100 per cent higher than those applicable in the US.

“Government may do well to shed light on a claim made in the EU Commission’s country report on Malta wherein it is stated that Malta’s eventual connection to the European Gas Network would result in further price reductions for households (25% on average in 2014) and businesses (15% on average in 2015),” the Chamber said.

It said it was clear that future economic prosperity was dependent on courageous political decisions and reforms that Malta needed to undertake to rectify inhibitors to future sustainable growth.

The Chamber reiterated its urgent appeal for discussion on national competitiveness to be initiated in earnest at MCESD level in an attempt to resolve long-standing issues and ensure the right conditions for the generation of growth and prosperity in the country.