Political and economic instability rated as main reason for drop in sales

The Business Performance Survey 2019, conducted by the Malta Chamber of SMEs, has revealed that most businesses believe the reason behind a drop in sales in 2019 to be political and economic instability.

The Malta Chamber of SMEs concluded that 2019 was slower than 2018, but possibly even slower than expected.

It found that the political crisis at the end of 2019 had an effect not only on the festive season, but alo overall business performance.

Consequently, 2020 has started has started off worse than expected, but with a changing political scenario, businesses are optimistic about the rest of the year.

The study took the shape of an online survey with unique tokens - a system where participants had a unique number to make sure that they could not reply more than once.

It took place over the between 9 and 24 January, using a pool of participants consisting of 300 businesses operating in Malta. This is the highest number of participants to have ever participated in the survey.

The survey showed that most businesses felt that they experienced an increase in sales when compared to 2018 with 41 per cent experiencing an increase. However, this is 10 per cent less than the satisfactory rate of last year’s survey.

Notably, while in last year’s survey only 17 per cent reported a decrease in sales, this year’s survey showed that this number has increased to 33 per cent. The reason behind this is greatly attributed to the political and economic instability that Malta experienced in the last months of 2019.

Profitability also suffered in 2019, as 38 per cent said that they had made smaller profits, which is a significant increase over the 22 per cent reported in the 2018 survey. Once again, the majority of participants blamed political turmoil for this decrease.

When looking at the number of sales during the festive season, there was a 10 per cent decrease in satisfaction from last year’s survey, and a 15 per cent increase in dissatisfaction.

Political turmoil, followed by numerous power cuts that Malta faced at the time, was again identified as the culprit. In fact, the report shows compared to the rest of Malta, businesses in Valletta were the least satisfied with sales.

The report also showed that there was a 20 per cent increase in businesses that participated in Black Friday this year. However, 53 per cent of participants felt that sales did not meet their expectations.

There was also an overall dissatisfaction with January sales this year, with 38 per cent saying that the figures did not meet their expectations.

Despite all of this, businesses seem hopeful about the rest of 2020, as only 24 per cent believe that it will be worse, while 37 per cent feel that this year will benefit them. The Malta Chamber of SMEs stated that this is a common pattern it encounters, wherein a non-profitable year brings with it higher hopes for the coming year.

Participants believe that the main challenge for 2020 will be an increase in costs in general. Other challenges included labour and employee shortages, increasing labour costs and political instability.

CEO of Malta Chamber of SMEs Abigail Mamo said that “the timing of this survey is important.

The political scenario is very sensitive and a lot of changes were happening when respondents were replying. This had an effect on the way they are looking towards the coming year, she said.