In the wash of all that was going on last month in connection with the Valletta Migration Summit and CHOGM, many issues that ought to have been given attention fell by the way.
One such issue was that raised by the European Commission over its warning on what it called competitive erosion. Although Brussels did not feel it was necessary to subject the island to any in-depth analysis this year because, it said, no apparent economic imbalances appeared on the horizon, it warned that Malta should beware when it came to competitiveness because continuous losses in exports indicated long-term problems.
This is how the Commission put it: “There have been losses in export market shares in recent years, which, if persisting, may indicate risks of competitiveness erosion even if cost competitiveness developments moderated in 2014.” It is quite a sober assessment, one that should not be swept under the carpet in the rush of self-praise over the good economic results that many on the government side are resorting to these days.
It is great that Malta keeps doing well but politicians ought to be careful not to be over-confident as this can breed complacency. It is pathetic that the government accuses the Opposition of being negative practically every time it draws attention to matters, which, in its opinion, ought to receive greater attention than that being given now.
The Opposition has been drawing attention to the situation in industry for quite some time now and it looks that its remarks are quite in order considering the warning just given by the Commission and the latest trade figures.
As Mario de Marco, deputy leader of the Opposition and shadow minister of finance, had rightly remarked in a party pre-Budget document, economic indicators were showing two contrasting positions. He remarked that, while the government was keen to discuss and push those indicators that pointed towards a healthy economy, it seemed to give little or no importance to indicators that pointed to the opposite direction.
Figures just released by the National Office of Statistics for the first 10 months of the year show a drop of €171.6 million in the value of exports, not an insignificant figure.
The biggest drop was registered in the export of mineral fuels, lubricants and related materials. However, other sectors registered decreases as well.
For example, exports of machinery and transport equipment, which include electronics, dropped by €39.7 million, a substantial amount.
Two other sectors that showed decreases, albeit on a much lower scale, are the beverages and tobacco sectors, and chemicals. On the other hand, there was a healthy rise in food exports and increases in other goods. It is well and good to promote and support the financial services sector, tourism, gaming and other lines that are giving a significant contribution to economic growth but it will be wise to give the same attention to manufacturing, and, particularly, to export trade.
Infrastructural projects as well as the new construction work that is going on today, plus the new hotel developments on the drawing board, will, no doubt, help keep the economy buoyant for quite some time but when these are finished the economy would have to sustain itself on the strength of its other profitable economic anchors.
There are good grounds to argue that manufacturing and export trade ought to remain an integral part of the economic set-up. While it is important to develop new economic niches, it pays to give more attention to manufacturing and export trade to have a diversified economic base.