A study conducted by Business Europe - an umbrella organisation representing business organisations in the EU - has shown that Malta needs to perform better in a number of areas so that its economy will emerge from the current global downturn in better shape.
The study, called the "EU's Reform Barometer", was presented earlier this week to the EU's finance ministers and benchmarks member states on the basis of key indicators covering labour utilisation, productivity, investment, competitiveness and public finances. It identifies front-runners and laggards and singles out growth bottlenecks in each country. This study places Malta with a group of 12 laggards, which also include much bigger economies such as the UK, Italy, Greece, Spain, Portugal and Belgium.
On the other hand, according to the study, the best performing member states in the current difficult circumstances are Germany, Poland, Austria and Cyprus.
The study shows that although Malta has managed to conclude some important economic reforms and has managed to improve its standing among EU member states in the past years, it has failed in some important areas.
Among the positive aspects Malta has managed to improve its standing vis-à-vis its EU counterparts where it comes to corporate investment, labour utilisation, employment rate, annual hours worked per person employed, labour participation and dependency ratio meaning the working age population as a percentage of the total population.
Malta's entry into the eurozone two years ago was also deemed as a crucial step so that the islands make a bold improvement particularly in the management of the economy and public finances. In fact, according to Business Europe Malta made a remarkable improvement in crucial indicators such as the level of government gross debt, in decreasing its public deficit and in public investment as a percentage of total expenditures.
However, Malta has lost its ranking when it comes to other important sectors of the economy, particularly in its export performance, in its relative labour costs and where it comes to the current account balance as a percentage of GDP.
Sources close to Business Europe told The Times Business that although Malta cannot be compared to big economies such as Germany and France, its overall economic performance in the past years has been going in the right directions.
"More reforms should be done in order to decrease its expenditure on certain items particularly where it comes to healthcare," the sources said.
"This has already been repeatedly highlighted even by the Commission," they said. On a general level the Reform Barometer shows that no member states are performing well in every area and that room for policy improvement and learning is present everywhere.
With regard to the 10 largest EU economies, Sweden, Austria, the Netherlands and Germany are combining above-average scores on a number of fronts with a certain degree of resilience to the crisis. Yet these countries also suffer from important weaknesses compared with the other countries, notably related to a low level of hours worked per person, a relatively high dependency ratio and a higher overall tax burden.
According to the study, the UK has lost significant ground during last year's recession, mainly stemming from the rapid rise in public deficits combined with weaknesses in external competitiveness and corporate investment.