Business leaders are concerned about the Maltese economy entering into recession, but stress this could be a temporary blip and have called for the situation to be carefully monitored, a clear focus on Malta’s economic needs and for improvements in the country’s competitiveness.
This does not mean the country is facing a crisis
Joe Farrugia, director-general of the Malta Employers Association told The Times Business: “It might be the case where we have just ‘brushed’ with a recession and the economy will recover in the second and third quarters, thus bringing growth projections back on track. Certainly what is required is careful monitoring and if necessary focused action similar to that undertaken during the 2008-2009 recession,” he said.
Mr Farrugia said he was particularly concerned about the Governor of the Central Bank’s statement that Malta’s statistics may not be representing the true state of affairs due to the impact of inventory changes on the calculation of GDP.
“I suggest that this matter is dealt with urgency as it is clearly distorting the figures, especially if it is true that these fluctuations contributed to a negative of six per cent in real GDP in the first quarter of 2012. This figure has to be broken down to determine whether economy activity has actually slowed down during the first quarter, or whether this is owing to adjustment for statistical discrepancies.”
Mr Farrugia said that although he did not believe there is a direct relationship between Malta’s recent political turmoil and the recession “there is tremendous disappointment at the detachment of the parliamentary agenda from national economic and social priorities”.
He added: “While our house is burning, our political class has been wasting precious time on ego trips, character assassinations, and petty power struggles.”
Chamber of Commerce, Industry and Enterprise director-general Kevin Borg said that Chamber noted the latest GDP figures which “technically” place Malta into the recession definition.
“Nevertheless, for the Chamber this does not mean that the country is facing a crisis but a temporary shock. Diversified as it is, our economy is in good shape and we are managing to maintain a good socio-economic balance. The country managed to attract good business across a wide range of economic activities .”
Mr Borg said that while the Maltese economy had received positive reports from the IMF and the European Commission, both institutions have given Malta clear signals to protect its competitiveness.
“The Malta Chamber’s calls have run parallel to those of the IMF and the Commission, urging the authorities that the country cannot afford to take its competitiveness for granted,” he said.
Meanwhile business analyst and former banker John Cassar White told The Times Business: “We have to learn to live with the ups and downs of economic cycles and as long as we continue to target the long term issues that can affect our future prosperity, then we need not be too disheartened.”
He added: “We need, however, to continue focusing on improving our competitiveness by ensuring that our educational system gives us the results that we aim for, invest more in training of workers, and encourage private investment to revitalise our present businesses and encourage new ones to set up.
“At the same time we should continue with the reforms of our public finances to ensure that our health and social services are sustainable and effective in the long term.”