The Maltese economy has just gone through the worst six months of recent years. It performed like a car with two punctured tyres, able to to move forward only slowly, Finance Minister Tonio Fenech told business leaders this morning. However, things could be getting better.
"There are a number of signs that the worse may be over, at least there is now more stability," Mr Fenech said, But the situation was still fragile, he warned.
Speaking at a business breakfast as part of the budget consultation process, Mr Fenech reiterated his forecast that 2009 could see the economy shrinking by 0.9 percent, which was nothing to be happy about, but was much better than most EU countries.
The minister gave an overview of the economy, pointing out that in the first quarter, exports dropped by 26%, imports of consumer goods were down by 12% and tourism registered a drop of 41,000 (13%).
Although unemployment increased by more than 1,000 over a 12-month period, the economy was still creating jobs and in the first quarter, the number of gainfully occupied increased by 1.8%. The EU 27 average of the gainfully occupied showed a drop of 0.8%.
Mr Fenech said that the fact that inflation was above the EU average was a source of concern, although, he said, the higher utility tariffs were a major contributory factor.
Priorities of the budget had to be sustainability and competitiveness including jobs, investment, tax policy, fiscal sustainability, education and skills, public service reform, research and innovation,
During the activity a number of suggestions were made by those present.
George Schembri, CEO of of the MHRA, said the sector did not wish to see any major jolts as had been the utility tariffs last year. He reiterated the association's disagreement with the planned 50c levy per tourist per night from next year, even if it was delayed. He called for funding allocations for all-year-round marketing.
Vince Farrugia, Director-General of the GRTU, called for more coordination between ministries and insisted that regulators needed to have performance benchmarks which were transparent and accessible.
Joe Farrugia, director general of the Malta Employers' Association called for a reform of the Cost of Living Adjustment (COLA) mechanism, insisting that in such difficult times, labour costs could not increase in a blanket way with no regard to productivity.
Grace Attard from the Council of Women spoke on the need to extend maternity leave as a means to encourage more women to work.