Malta’s economy powered ahead in the second quarter, recording the fastest growth in the eurozone at 2.8 per cent.
By contrast, at 0.2 per cent, growth for the whole of the euro area has nearly stalled, compared to 0.8 per cent in the first quarter. In the first three months Malta’s economy had grown by 0.7 per cent. The figures emerged from new data issued by Eurostat in Brussels and the National Statistics Office in Valletta, yesterday.
They come just a day after Moody’s downgraded Malta’s bond ratings by one notch citing the likelihood of medium-term growth coming in at under the previous figure of over three per cent as a result of the global recession.
According to Eurostat, Malta’s GDP growth between April and June was the highest among the members of the eurozone.
Worryingly for Malta, though, the performance of some member states seems to be pointing towards difficult times ahead for the European economy.
Germany and France, the two biggest economies, performed badly, with Berlin reporting growth of just 0.1 per cent (1.3 per cent in Q1) and France at a standstill – 0 per cent (0.9 per cent in Q1).
Italy registered 0.3 per cent and the other of Malta’s main trading partners, the UK, also performed poorly at 0.2 per cent.
An EU official observed that, while Malta’s economy was growing steadily, particularly when compared to 2010, the eurozone was showing signs of weakness.
“This will have a negative effect on all the eurozone at the end of the day,” the official warned.
“Malta depends on the other European markets for its exports, tourism and services, and negative economic news in the rest of the euro area may eventually mean negative news for Malta’s economic growth prospects.”
According to the NSO, Malta’s GDP between March and June reached €1.6 billion, with growth registered across all the main economic activities except financial and insurance activities, construction and electricity, gas and water supply.
Reacting to the figures, Finance Minister Tonio Fenech said they showed Malta’s economic policy was on the right track and that despite the international difficulties Malta was managing to grow at a steady pace.
He said decisions made by the government to boost the economy had resulted in a 50 per cent rise in exports this year and an unemployment level of just 6.3 per cent.
The minister also reacted to Moody’s downgrade of Malta’s foreign and local currency government bond ratings from A1 to A2 and its revision of outlook to negative.
He said that while it understood the decision, the government was disappointed by it.
“The agency emphasised that the reclassification was not for lack of effort by Malta to address the economic crisis. Rather, Moody’s said Malta dealt with the 2009 crisis well and the impact was small. But because of what is happening in the rest of the world and because our economy is small and open, there will be an impact on Malta’s economy,” Mr Fenech said.
“We should not be disheartened. As the report said, our economy is strong and can withstand this crisis. Moody’s is also confident that Malta can deal with a second round crisis,” he added.
Labour leader Joseph Muscat described the downgrade as a matter of concern but said it came as no surprise to Maltese families, who had long been struggling to make ends meet even as the government claimed the economy was improving.
“We expect honesty regarding the true situation of government finances,” he said. Both the European Commission and the European Central Bank declined to comment on Malta’s downgrade.