The latest data from the statistical arm of the European Commission confirms what nowadays has become common knowledge and accepted by all: as a country Malta is not closing the gap in terms of income levels when compared with the EU.
For 2008, Malta's Gross Domestic Product stood at 76.4 per cent of the EU average, down from 77.9 per cent in the previous year. In 2000, the GDP per capita in purchasing power standard (PPS) stood at almost 84 per cent of the EU average.
When comparing these figures with those of Cyprus, Slovenia and the Czech Republic, among others, we find that, while in 2000 their GDP levels stood at 88.7 per cent, 79.8 per cent and 68.5 per cent respectively, in 2008 their level increased to 94.6 per cent, 89.8 per cent and 80.4 per cent.
The level of Estonia in 2000 used to read 44.6 per cent of the EU average. Now it stands at 67.2 per cent.
The disappointing figures from our end are the result of Malta's sluggish GDP growth rates in the last decade. From 2001 to 2008, the island's economy expanded on average by two per cent while that of Slovenia rose by over four per cent and that of Estonia increased by almost seven per cent.
The Maltese government has little space to manoeuvre. The fiscal deficit for 2008 stands at 4.7 per cent of GDP and the European Commission made it very clear that in the next budget the government has to take some very drastic measures to bring the deficit down. It is useless for the Minister of Finance to say that the government will not increase taxes or for a former finance minister, famous for championing the "money no problem" attitude in the first Nationalist Legislature of 1987, saying that the EU is bullying Malta. The big problem for Malta is that we are not credible anymore and have been living with this deficit for so long that some people have grown used to taking it for granted.
Looking at the emerging economic indicators makes the picture even more dull. Great uncertainty surrounds the labour market and it is expected that unemployment continues to rise in the coming months because, normally, there is lag of about two to three quarters before the dampening impact of a recession hits the labour market as firms may use various margins of adjustment before reducing their workforce.
Tourism arrivals are down and this summer is expected to be even worse than that of 2001. The number of cruise passengers arriving in Malta dropped by 57 per cent in May over the comparative month in 2008.
We are being hit by external pressures. A case in point is the recent announcement by British Airways that, as part of a company-wide review of routes due to financial concerns, it is suspending its Malta-Gatwick route though the national airline, Air Malta, has once again come to the rescue to provide this important route itself.
However, we are also paying for our past sins. The government has lost several opportunities to make the economy more competitive and it continues to take contradicting action and sends conflicting messages.
Countries that are tourist destinations and are in direct competition with us, such as Greece, Spain and Cyrus, are taking decisive action to attract tourists. These countries have recently launched initiatives to lower taxes and airport charges and also to inject millions of euro directly into their economy in order to reverse recent traffic and tourist declines. The Greek government has cut charges at all regional airports to zero, the Spanish government has zero rated airport tax for certain airlines and Cyprus is injecting about €350 million into the tourism and construction industries directly to save jobs.
On the other hand, the Maltese government is holding press conferences and making eye-catching power point presentations, initiating studies and practically doing too little too late!
The author is shadow minister for tourism.