In recent months there has been a concerted attempt to stall the Maltese economy. Opposition spokespersons have been peddling around the claim that we have a recession “made in Malta”, with investment being postponed and households not consuming. The reality is different.
You do not need to take my word for it. Take the words of the thousands of firms and consumers interviewed every month by the European Commission as part of its economic sentiment indicator exercise.
This is possibly the largest and most regular business and consumer survey in Malta. It is carried out independently of Maltese authorities and to quote the Commission’s website it is “an indispensable tool for monitoring the evolution of the EU and the euro area economies”.
On January 30, the Commission published the results of its survey. This showed that confidence in Malta registered the highest increase observed across the EU, rising by 10 per cent over December. In the rest of the European Union, the improvement was two per cent and in 12 countries there was either a decline or stable confidence.
The Commission study shows that the economic sentiment in Malta is at its historical average, disproving claims of any confidence crisis. In fact, the sentiment is above the historical average in manufacturing, construction and most importantly among consumers.
Maltese manufacturing firms told the Commission they have order books that guarantee more than 12-and-a-half- months of production. This is the best result ever reported since the EC survey started in 2002. This contrasts much better with the average five months of production work booked by manufacturers in other European countries.
Meanwhile, Maltese construction firms said that if they were to have no new orders for the next seven months, they would still be working at full capacity throughout. These impressive numbers show that our economy is bold and has a stable momentum that guarantees stability. Far from the Opposition’s claims of a “made in Malta” recession. It is easier to understand what a recession looks like if one looks at the last five years of a Nationalist government. Economic growth stood at five per cent of the gross domestic product with Malta having a debt of 43.3 per cent of GDP with an unemployment rate which stood at 3.5 per cent.
In recent weeks we were told that retailers faced a dramatic drop in sales. Guess what: the study carried out by the Commission shows that the majority of retailers reported an improvement in activity over the last three months. By contrast just before the Nationalist administration imploded in 2013, a majority of 24 per cent of retailers were reporting falling activity.
We remain committed to grow the economy, help business invest and move forward while safeguarding the interests of our consumers
The buoyancy of retail activity reflects the Commission’s estimate that 36 per cent of households are currently making major purchases. In December 2012 only five per cent were in a position to do so. Whereas in January 2020 a majority of 29 per cent of Maltese consumers told the Commission that economic activity has been growing, in January 2013 an equivalent majority had instead said that the economy had been contracting.
Another economic certificate was given recently by the credit rating agency DBRS Morningstar. While reaffirming their highest rating ever for Malta, A (high) with a stable outlook, these international experts state that “Malta’s economic performance has been extremely strong between 2013 and 2019” and that “DBRS Morningstar expects Malta to continue to grow at a solid pace and continue to post fiscal surpluses in coming years”.
While some have commented about the new prime minister’s strategy of continuity, the DBRS Morningstar experts imply that the current positive rating for our country requires “a broad continuation of macroeconomic policies” and “a stable policy environment”.
If that is assured, they forecast our public debt ratio should fall to “one of the lowest in the EU”, allowing government “valuable room to support the economy”. They praise the fact that “growth has been growth-based with outward-facing sectors such as tourism, gaming, financial and business services being key to the expansion”.
As minister for the economy, I am fully committed to continue this diversification boosting new economic sectors and inducing further growth to our economy.
I was astounded by the recent statements of Robert Arrigo, outgoing deputy leader of the Nationalist Party. He claimed that government was deceiving the public by saying that tourist arrivals are now nearing three million, as according to him there are just 1.1 million foreigners who stay in hotels. Arrigo must have been reading the official statistics for 2012 when figures tallied 1.1 million tourists residing in hotels.
Economic stability and the sterling work done by the Malta Tourism Authority led to figures topping 1.6 million tourists in 2019. Arrigo’s economics are almost 50 per cent short of what statistics really show.
I am also flabbergasted at how Arrigo has taken it against all those hard-working people who have invested in property to rent out on B&B basis for tourists opting for a different holiday experience in Malta. Why should we as a government hamper the investment of hard-working families and individuals who are the backbone of our economy?
An economy doing well should be doing well for everyone and not just hoteliers like Arrigo. It is good to see that not only our hotels are full with off-peak seasons being a thing of the past, but also B&B accommodations doing well in several of our unique localities.
Besides, this type of tourism is a direct injection in the disposable income of Maltese households who rent accommodation. A recent Central Bank of Malta study estimates households get as much as €110 million from this source.
As a hotelier Arrigo should not worry about the hotel industry. However, if he’s into politics, he needs to decide on whether he’s going to work to safeguard his own interests or the wider interests of the Maltese people and the economy.
In 2019, hotels, besides the 1.6 million tourists who stayed in them, benefitted from another 0.4 million Maltese guests. Our remarkable economic prosperity means that hotels are no longer the prerogative of foreigners. Hundreds of thousands of Maltese are now spending their well-earned income at hotels, helping to generate new income streams for that industry through internal tourism.
My commitment is to continue striving to drive things forward so that our families and businesses flourish.
I will take forward energetically a strategy in favour of further investment diversification and innovation.
The appointment of our new prime minister has boosted economic sentiment by 10 per cent in just one month. Trust ratings in Prime Minister Robert Abela are even better. As a government we remain committed to grow the economy, help business invest and move forward while safeguarding the interests of our consumers.
Silvio Schembri is Minister for the Economy, Investment and Small Business.