Man­ag­ing suc­cess

The Malta Business Weekly - - NEWS -

Af­ter meet­ing MCESD, Fi­nance Min­is­ter Ed­ward Sci­cluna be­gan on Mon­day the lengthy process of pre-Bud­get con­sul­ta­tions by hold­ing a meet­ing at the Phoeni­cia Ho­tel.

There will be two more pub­lic meet­ings, one in Gozo, be­fore Bud­get Day on 22 Oc­to­ber.

De­spite all the talk on Malta’s eco­nomic suc­cess, it is not easy to man­age it, the min­is­ter said. It is more dan­ger­ous to get down from a moun­tain than it is to climb up.

We can­not take this suc­cess for granted. Malta’s eco­nomic progress is closely watched and in­ter­preted all over the world.

Thus the NSO re­sult of Q2 needs in­ter­pret­ing. Be­fore that quar­ter, Malta’s growth was es­ti­mated at 7% with real growth be­ing be­tween 5% and 6%. In Q4 the econ­omy was still go­ing strong with a 5.9% growth when the nor­mal growth was 8%. What seems to have hap­pened is a de­flec­tor in the case of ex­ports, some­thing dif­fi­cult to un­der­stand. It would seem this was caused by one com­pany and its re­sults, Sci­cluna said, not men­tion­ing the com­pany’s name.

He then out­lined three sec­tors which have ex­pe­ri­enced strong growth. In the first place he put quar­ries that are fac­ing huge de­mand be­cause of tourism. Se­condly the igam­ing and fin­tech sec­tors are grow­ing fast. Then comes tourism, fol­lowed by the con­struc­tion sec­tor.

The other sec­tors re­ported more mod­er­ate growth but all sec­tors re­ported growth.

Nev­er­the­less, Malta as an open econ­omy faces chal­lenges com­ing from abroad – Brexit, pol­i­tics in Europe es­pe­cially in Italy.

Growth can­not be taken for granted. It must be watched all the time. The Mal­tese econ­omy at this point does not need ex­tra stim­u­lus.

The in­fla­tion rate is pick­ing up to 1.6% or 1.8%. The ideal is an in­fla­tion rate of 2%, the sig­nal of a healthy econ­omy. In the UK, the Gover­nor of the Bank of Eng­land has to write a let­ter to the Chan­cel­lor of the Ex­che­quer to ex­plain any time the rate of in­fla­tion goes sig­nif­i­cantly more, or un­der, 2%.

What has kept in­fla­tion from soar­ing has been the in­flux of for­eign work­ers. Other- wise, we would have had a tight labour mar­ket.

One must be care­ful when speak­ing of for­eign work­ers. One must an­a­lyse the over­all im­pact.

The Mal­tese work­ing force is now 200,000 and em­ploy­ment is at a con­stant rate. We used to think we would be lucky if we get a 70% par­tic­i­pa­tion rate but this has in­creased in re­cent years and we now can say we have a North Euro­pean econ­omy.

There is still a long way to go. We must take care of the poor and the el­derly in re­tire­ment homes.

Ide­ally, we should have a bal­anced econ­omy that is in a small sur­plus. We do not need a big sur­plus. Be­sides, we have the IIP pro­ceeds which we can use to bal­ance the econ­omy. Our econ­omy can­not be com­pared to that of the UK, but more to that of Ger­many or the Nether­lands.

A bal­anced econ­omy with a small sur­plus also helps carry the na­tional debt.

As to pub­lic fi­nances, the IMF del­e­ga­tion has been here and has of­fered some ideas in this re­gard. The ex­ter­nal ac­count also in­di­cates a strong and healthy econ­omy.

The min­is­ter spoke about people at risk of poverty. Gov­ern­ment still has a lot to do to con­tinue tack­ling this is­sue but one must ask the ques­tion: Are you bet­ter off than last year, even if in ab­so­lute terms the per­son is still un­der the poverty line.

He also agreed we must be more care­ful with re­gards to for­eign work­ers.

Fi­nally, the min­is­ter ran through what had been sug­gested by the con­sti­tuted bod­ies. Most were sug­ges­tions that have been made over and over again.

The same themes were heard from rep­re­sen­ta­tives of the con­sti­tuted bod­ies when the meet­ing was turned over to the floor. It was the same people as al­ways say­ing the same things they have said at count­less MCESD meet­ing.

One of the few ex­cep­tions was a priest, Fr Busut­til, who spoke of people suf­fer­ing. Malta’s rate of school leavers is one of the high­est in Europe. Some people can­not af­ford pay­ments and they are dou­bly pun­ished when they seek to pay their dues late. People can­not af­ford rents. He is glad Malta is mov­ing ahead, but asked pol­icy-mak­ers to think of this re­al­ity.

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