The Central Bank of Malta is placing new emphasis on the need for economic research, building on the initiative last year to publish policy notes on particular topics.
Senior economist Aaron Grech said the Bank was scaling up its programme whereby its economists meet quarterly with all major non-financial operators to get a more direct feel of national and international emerging economic trends.
“The target group is growing fast and is resulting in a more effective grasp of issues affecting local business conditions. Governor Mario Vella’s long and extensive experience of foreign direct investment helps,” he said.
The CBM is also introducing a new statistical information system that will reduce reporting burdens on financial institutions while gathering even more information and reducing statistical processing times.
This will help the CBM’s Statistics Division to devote more of its resources to the gathering of new data and to statistical analysis.
In August, the Bank undertook an overhaul of the its monthly Economic Update to focus on the results of the European Commission’s business sentiment survey, official industrial production indicators, tourism activity, retail sales, administrative data on international trade, employment and unemployment, retail and industrial prices, monthly evolution of the Government’s Consolidated Fund, and trends in monetary and financial data, including deposits and interest rates.
“Our economists are constructing an indicator of business conditions which will serve as a coincident indicator of economic activity,” Dr Grech added.
As from next year the CBM’s Quarterly Review will be published four times annually. It will feature a streamlined economic commentary with more space for discussion of economic research.
Beyond this, we have ambitious plans
“Beyond this, we have ambitious plans. To tackle salient economic areas we need to go beyond the monologue mode,” he said.
The senior economist also stressed that the Bank has a statutory role to advise the government generally on economic and financial matters. It has built and published a new macro-econometric model of the Maltese economy to serve as a tool to conduct simulations to assess the potential impact of economic and policy developments and to generate economic forecasts.
It also ensures that it is in a position to attract what he described as the “best minds in this country”, also working closely with the University of Malta by funding selected economic research projects, internships for university students and postgraduate courses. It also encourages its economists to publish working papers and articles in peer reviewed academic journals.
The CBM will also network with its counterparts to improve models and research capability.
For instance, together with the Banca d’Italia, the CBM plans to publish a new model of the Maltese economy, the first employing state-of-the-art ‘dynamic stochastic general equilibrium’ modelling methodology.
The Bank will also hold a research symposium in the second half of next year on challenges and opportunities of sustainable economic growth in Malta.
“We will confront the sustainability of Malta’s public finances and external balance, house price levels and financial conditions. Besides disseminating research on its website and through its publications, we will also give occasional public talks and presentations of our research findings.
“We will also be more transparent about the process through which the Bank makes economic forecasts and publicise the latter more on its website. We will engage with the public through public talks,” he reassured.