Gladiator
14thJune2005, 21:43
Shocking economic figures upset Gonzi’s convergence plan
Matthew Vella, Malta Today, June , 2005.
Malta’s first year into the EU has come and gone, and 2005’s first quarter of economic activity has brought bad news – a negative growth in the gross domestic product of 0.1 per cent and a drop in exports of 14 per cent.
It is not a good sign, former Labour finance minister Lino Spiteri comments, but Government says the figure should not be alarming: ST Microelectronics’s damp business may have skewed the statistics.
“Worrying to say the least,” Labour’s shadow finance minister Charles Mangion says, doubtful that PM Lawrence Gonzi’s convergence plan to have an economic growth of some three per cent in 2005 alone will actually manifest itself. Maastricht has never looked this far.
He compares the first quarter for 2004, where despite a 2.4 per cent increase in GDP, the disappointing growth for the whole year had been a measly one per cent. “One notes the decrease in value added in the island’s major economic pillars,” he says about construction and tourism. “We have to rethink our priorities, address the shrinking manufacturing industry, and address the problems in tourism. The prospects for this year do not look positive.”
But as the island’s restructuring is in full swing, with a plan for economic regeneration blessed by the European Commission expected to bring the country in line with Maastricht’s eurozone demands – a deficit of less than three per cent of the GDP – by 2008, the negative GDP growth is bad news for Gonzi’s
convergence plan.
The second quarter of economic activity is nearly out – two consecutive quarters of negative GDP growth mean recession for Malta’s economy that is still trying to find its feet in the midst of severe global competition.
Nobody however wants to speak of recession. “Speaking on recession begets recession,” former PN finance minister John Dalli says. “If indicators are pointing towards STM contributing to this negative effect, we certainly cannot talk of recession.”
It is in fact the continuous decrease in the value of exports that worries most. Lino Spiteri says the decrease in GDP was expected although judgement will only be taken once a trend can be spotted. He blames the increasing balance of trade deficit, mainly characterised by the decreasing value in exports.
“We exported the same volume of exports, but the value has decreased,” Spiteri says, with exports dropping by 14.1 per cent in real terms due to lower export prices.
Malta is undeniably caught in the trap of global competitiveness. Parliamentary Secretary Tonio Fenech in fact looks away from the statistic: “The issue is not whether we have a statistic pointing to negative growth. If we look at other sectors, export figures have remained stable. It brings up the issue of wage restraint and the need for our country to be more competitive.”
And in fact, it is hoped that exports in the non-STM economic dimension remain stable in the coming months.
Still, STM looms large in the economic psyche. Caught between the pincers of high labour costs and the falling dollar, STM’s plans for shedding 3,000 jobs could not have come at a worse time.
“We know for sure that exports have decreased for ST Microelectronics at a time when the world market for semiconductors is very quiet,” Tonio Fenech told MaltaToday. “We also know that our manufacturing exports figures depend on STM’s performance. From the information we have it is a temporary slowdown that has also been caused by overstocking in the past months. The indication we have is that by September this market will pick up, so there is nothing to be alarmed about.”
An angry Vince Farrugia from the Chamber of SMEs (GRTU) disgarees: “Malta’s economic rhythm has stopped for good and this has been going on for so long that it is alarming.”
Restructuring hell
(He is the one who had ran all those deficits) John Dalli also stops short of saying whether this first quarter of growth is a serious cause for alarm. (In other words Malta is in a recession!) “The reality is that STM is a large manufacturer which skews our statistics when its performance is down. But although it has the aura of this giant in the Maltese economy, the fact is that statistics only show total turnover and not the value added effects of companies’ activity on the economy. When you consider that, the impact of STM is not as big as perceived.”
Despite the decrease by 5.5 per cent in the manufacturing sector’s gross value added (Lm4.4 million) over the same quarter last year, the reality is that Malta’s restructuring process is proving to be very painful.
John Dalli says it is the net effect of new activity being generated but not being enough to counter the effects of old activity becoming redundant. “This is a period of great adjustment,” he points out.
But veteran economist Karmenu Farrugia comments wryly on the harrowing economic reality. “The fact is that we had to do our restructuring before EU accession, but obviously it would have been a vote loser in the referendum. But still, it had to be done before. We were never expecting to have a 0.1 per cent negative growth in GDP in 2005. I am shocked.”
Even Vince Farrugia says that the 14.1 per cent decrease in exports is a sign that the efforts for restructuring according to EU demands are now bearing fruit. “Government’s EU strategy is not working, it did not have a serious strategy of what Malta would do upon accession. It is a failure which has created greater disillusion.”
(I long have held the conviction that Malta's economic problems were long in coming. The country was never seriously prepared for accession! EFA always had at the back of his mind the god damn referendum. Serious problems needed drastic action, but he failed to tackle them for fear of being unpopular with the voting public!)
Tourism limbo
Karmenu Farrugia points towards the construction industry, a final bastion for the generation of jobs despite its ill-effects on the environment and the artificial spiralling of housing prices through speculation: “Every form of activity has its negative effects,” he says.
Quarrying today generates a stable 0.4 per cent in gross value added, whilst construction’s contribution to gross value added increased to 5.2 per cent over last year’s first quarter.
“It’s the construction industry and the mega projects at Tigné and Manoel Island that is keeping us from greater losses in jobs. That is why MEPA gets the flak for refusing a lot of permits. But right now construction is sustaining employment, because tourism is flat.”
In fact, Farrugia points towards the missing link – tourism. The potential for tourism earnings to alleviate the great outflow in currency has never been as discouraging as 2005 ominous signs.
Charles Mangion remarks that the restructuring at the Malta Tourism Authority, fraught as it is with teething problems following new appointments in 2005, is taking too long. “By the time September arrives and the Deloitte restructuring would supposedly be in place, the summer season is over. Tourism is the one sector where emergency measures can reap instant results.”
With April’s tourism figures the lowest for seven years in terms of arrivals, and advance bookings for summer from Malta’s main core market, the UK, greatly lacking, hoteliers have complained about MTA’s performance of recent.
Karmenu Farrugia also complains greatly about the great outflow in currency. “Nobody complains about our financial sector that is in foreign hands. Between 55 to 60 per cent of our banks are in foreign hands, and coupled with that our tourism is not bringing in enough money to offset our trade deficit.”
“Government should admit it has committed a mistake,” Vince Farrugia says. “From the ten accession countries, Malta is the only one to have fallen into this abyss. The private sector wants to help but it cannot if it keeps on being dominated by people who have no clue of entrepreneurship and about what is important for an economy to grow by snatching opportunities.”
And the people at Castile don't know what to do next?:mad: :mad: :mad:
Matthew Vella, Malta Today, June , 2005.
Malta’s first year into the EU has come and gone, and 2005’s first quarter of economic activity has brought bad news – a negative growth in the gross domestic product of 0.1 per cent and a drop in exports of 14 per cent.
It is not a good sign, former Labour finance minister Lino Spiteri comments, but Government says the figure should not be alarming: ST Microelectronics’s damp business may have skewed the statistics.
“Worrying to say the least,” Labour’s shadow finance minister Charles Mangion says, doubtful that PM Lawrence Gonzi’s convergence plan to have an economic growth of some three per cent in 2005 alone will actually manifest itself. Maastricht has never looked this far.
He compares the first quarter for 2004, where despite a 2.4 per cent increase in GDP, the disappointing growth for the whole year had been a measly one per cent. “One notes the decrease in value added in the island’s major economic pillars,” he says about construction and tourism. “We have to rethink our priorities, address the shrinking manufacturing industry, and address the problems in tourism. The prospects for this year do not look positive.”
But as the island’s restructuring is in full swing, with a plan for economic regeneration blessed by the European Commission expected to bring the country in line with Maastricht’s eurozone demands – a deficit of less than three per cent of the GDP – by 2008, the negative GDP growth is bad news for Gonzi’s
convergence plan.
The second quarter of economic activity is nearly out – two consecutive quarters of negative GDP growth mean recession for Malta’s economy that is still trying to find its feet in the midst of severe global competition.
Nobody however wants to speak of recession. “Speaking on recession begets recession,” former PN finance minister John Dalli says. “If indicators are pointing towards STM contributing to this negative effect, we certainly cannot talk of recession.”
It is in fact the continuous decrease in the value of exports that worries most. Lino Spiteri says the decrease in GDP was expected although judgement will only be taken once a trend can be spotted. He blames the increasing balance of trade deficit, mainly characterised by the decreasing value in exports.
“We exported the same volume of exports, but the value has decreased,” Spiteri says, with exports dropping by 14.1 per cent in real terms due to lower export prices.
Malta is undeniably caught in the trap of global competitiveness. Parliamentary Secretary Tonio Fenech in fact looks away from the statistic: “The issue is not whether we have a statistic pointing to negative growth. If we look at other sectors, export figures have remained stable. It brings up the issue of wage restraint and the need for our country to be more competitive.”
And in fact, it is hoped that exports in the non-STM economic dimension remain stable in the coming months.
Still, STM looms large in the economic psyche. Caught between the pincers of high labour costs and the falling dollar, STM’s plans for shedding 3,000 jobs could not have come at a worse time.
“We know for sure that exports have decreased for ST Microelectronics at a time when the world market for semiconductors is very quiet,” Tonio Fenech told MaltaToday. “We also know that our manufacturing exports figures depend on STM’s performance. From the information we have it is a temporary slowdown that has also been caused by overstocking in the past months. The indication we have is that by September this market will pick up, so there is nothing to be alarmed about.”
An angry Vince Farrugia from the Chamber of SMEs (GRTU) disgarees: “Malta’s economic rhythm has stopped for good and this has been going on for so long that it is alarming.”
Restructuring hell
(He is the one who had ran all those deficits) John Dalli also stops short of saying whether this first quarter of growth is a serious cause for alarm. (In other words Malta is in a recession!) “The reality is that STM is a large manufacturer which skews our statistics when its performance is down. But although it has the aura of this giant in the Maltese economy, the fact is that statistics only show total turnover and not the value added effects of companies’ activity on the economy. When you consider that, the impact of STM is not as big as perceived.”
Despite the decrease by 5.5 per cent in the manufacturing sector’s gross value added (Lm4.4 million) over the same quarter last year, the reality is that Malta’s restructuring process is proving to be very painful.
John Dalli says it is the net effect of new activity being generated but not being enough to counter the effects of old activity becoming redundant. “This is a period of great adjustment,” he points out.
But veteran economist Karmenu Farrugia comments wryly on the harrowing economic reality. “The fact is that we had to do our restructuring before EU accession, but obviously it would have been a vote loser in the referendum. But still, it had to be done before. We were never expecting to have a 0.1 per cent negative growth in GDP in 2005. I am shocked.”
Even Vince Farrugia says that the 14.1 per cent decrease in exports is a sign that the efforts for restructuring according to EU demands are now bearing fruit. “Government’s EU strategy is not working, it did not have a serious strategy of what Malta would do upon accession. It is a failure which has created greater disillusion.”
(I long have held the conviction that Malta's economic problems were long in coming. The country was never seriously prepared for accession! EFA always had at the back of his mind the god damn referendum. Serious problems needed drastic action, but he failed to tackle them for fear of being unpopular with the voting public!)
Tourism limbo
Karmenu Farrugia points towards the construction industry, a final bastion for the generation of jobs despite its ill-effects on the environment and the artificial spiralling of housing prices through speculation: “Every form of activity has its negative effects,” he says.
Quarrying today generates a stable 0.4 per cent in gross value added, whilst construction’s contribution to gross value added increased to 5.2 per cent over last year’s first quarter.
“It’s the construction industry and the mega projects at Tigné and Manoel Island that is keeping us from greater losses in jobs. That is why MEPA gets the flak for refusing a lot of permits. But right now construction is sustaining employment, because tourism is flat.”
In fact, Farrugia points towards the missing link – tourism. The potential for tourism earnings to alleviate the great outflow in currency has never been as discouraging as 2005 ominous signs.
Charles Mangion remarks that the restructuring at the Malta Tourism Authority, fraught as it is with teething problems following new appointments in 2005, is taking too long. “By the time September arrives and the Deloitte restructuring would supposedly be in place, the summer season is over. Tourism is the one sector where emergency measures can reap instant results.”
With April’s tourism figures the lowest for seven years in terms of arrivals, and advance bookings for summer from Malta’s main core market, the UK, greatly lacking, hoteliers have complained about MTA’s performance of recent.
Karmenu Farrugia also complains greatly about the great outflow in currency. “Nobody complains about our financial sector that is in foreign hands. Between 55 to 60 per cent of our banks are in foreign hands, and coupled with that our tourism is not bringing in enough money to offset our trade deficit.”
“Government should admit it has committed a mistake,” Vince Farrugia says. “From the ten accession countries, Malta is the only one to have fallen into this abyss. The private sector wants to help but it cannot if it keeps on being dominated by people who have no clue of entrepreneurship and about what is important for an economy to grow by snatching opportunities.”
And the people at Castile don't know what to do next?:mad: :mad: :mad: