Malta's economic growth could shrink by up to half over the next year, the government has been warned by experts and senior officials who are trying to hash out a plan of action to manage the impact of the coronavirus outbreak.
Sources involved in high-level government discussions on how to manage the economic fall-out from the COVID-19 pandemic told Times of Malta that if the spread of the virus was contained within three to four months preliminary projections showed the economy might take around a year of what is known as ‘a recovery’.
“This will see us go back to the economic rates that we had before 2013 and will have far-reaching consequences,” a senior official among those advising the government said.
The shrinking economy is forecast to have a major impact on third country nationals who live and work in Malta, particularly as the hotel and catering industries shed more staff.
Speaking in parliament on Tuesday, Economy Minister Silvio Schembri indicated a difficult time ahead for non-EU nationals previously given jobs in an economy largely built on importing third-country workers.
Charity begins at home. Our focus are Maltese and Gozitan workers. The moment foreign workers lose jobs they will have to go back to their country- Economy minister
“Charity begins at home. Our focus are Maltese and Gozitan workers. The moment foreign workers lose jobs they will have to go back to their country,” he said.
Another source said that the economy of Malta was forecast to drop by as much as one per cent of GDP this year.
Times of Malta understands that the government is looking into possible financial assistance mechanisms to help sustain Maltese businesses that have been largely shattered by the grinding halt of economic activity due to the spread of COVID-19.
One such possibility floated during the Castille meetings is for low-to-no interest loans to help cover wages for employees.
The source said this would ideally be capped at no more than a medium wage bracket to ensure the money went to those who were hardest hit by the spread of the virus.
These wage-covering packages, however, are not something the government is considering rolling out in the short term. Instead, the government is settling on an initial stimulus that it will announce later this week.
The final cost of this initial aid package was still being calculated but is expected to work out at anywhere between €10 million and €30 million monthly.
Employers who let go of staff due to the novel coronavirus outbreak were not expected to be entitled to the financial aid, another source told Times of Malta.
The economic stimulus, which is expected to be announced at some point this week, follows an announcement on Saturday that business owners and the self-employed will have all their tax and social security payments due for March and April postponed.
Correction March 18: A previous version of this article stated that the economy, rather than growth, would halve.