The economy has continued to grow by over three per cent in the second quarter of this year despite the unstable international environment, according to Finance Minister Tonio Fenech.

“The real turmoil regarding oil prices may have started to subside. Indications are good, but clearly there are still challenges ahead," the minister said during a business breakfast with the Chamber of Commerce this morning.

The chamber gave its preliminary reactions to the minister about the 2009 Budget and the National Reform Programme. It emphasised the need for more enforcement to ensure fair trade, while agreeing with the government’s approach of sustainable development.

“Short term goals must not be achieved to the detriment of future progress... fiscal targets should not be achieved at all costs”, chamber president Tancred Tabone stressed.

“Wages in Malta have increased at a much faster pace than productivity, but this could lead to an erosion of competitiveness and the relocation of companies to wherever investment is more profitable,” he added. This, he said, could result in slower economic growth and higher unemployment which could be an expensive price to pay for the short-term agreement on wage negotiations.

The minister said that the economy was being driven by the private sector, which provides 70 per cent of employment. He highlighted the need to invest in value-added knowledge based sectors to include more innovation and research.

The chamber said that a submarine cable link to the European energy grid should be pursued with urgency, to secure cheaper energy and more security. The minister agreed, saying that although alternative energy was still more expensive to invest in, “we need to invest today.”