Seeking minis out of season
The feeling that the EU and global recession has not as yet affected Malta, at least not severely so far, is quickly evaporating. The Prime Minister, as behoves a strategy centred on hope rather than foreboding, remains very upbeat about the local...
The feeling that the EU and global recession has not as yet affected Malta, at least not severely so far, is quickly evaporating. The Prime Minister, as behoves a strategy centred on hope rather than foreboding, remains very upbeat about the local economic situation. He chooses to stress positives, as he did following his visit to Germany, rather than look openly at the approaching threats.
Positives do need to be emphasised. They need to be examined to determine why they exist with reasonable promise, notwithstanding the widespread gloom. Whatever the depth of the recession, the bulk of yesterday's economic activity will continue. It is sentiment, aggregate demand and new investment decisions based on it that will take a knock.
The knock cannot be ignored. If it is, it will still break through the walls. Nevertheless one should examine what it is that drives existing operators to lay down new investment. Learning from positives with a view to attempt to emulate the lessons in other sectors is essential in the short and longer term.
It is also important not to allow the gloom not to grow unnecessarily black.
To remind one and all that every situation, no matter how dark, brings its own opportunities. That is what the Prime Minister is implicitly trying to do. That noted, it is more than silly of government spokespersons and fellow travellers, not least the Nationalist media, to attempt to paint a rainbow situation, ignoring the threats that have already arrived and others not far from round the corner.
A number of manufacturers have already been hit by the global recession. Tourism began to weaken several months ago, returning bad results for the fourth quarter of 2008, with worse to come in the current quarter.
This sector, in fact, will probably be the worst hit in the coming couple of years or more. It is in the grip of a double whammy. The general recession weakens demand for holidays in all of our traditional markets. On top of that, the sharp decline in exchange value of the pound sterling relative to the euro will translate into a terrible year as regards the British market, which is still the main driver of the tourist sector.
Actual developments and other forecast woes make it imperative that the sector is revisited. It is not enough to say that the Malta Tourism Authority was allocated extra funds in the 2009 financial estimates presented in November. Four months is a long time in the current state of the economy as it is influenced by events abroad.
The point was made rather kindly by Helga Ellul, president of the newly-merged Chamber of Commerce, Enterprise and Industry. In an interview in last week's The Times Business, aside from saying that last November's budget was overshadowed by the new energy tariffs, she opined that at the time "I think nobody realised just how critical the international economic situation was going to be and so the budget was unable to address this."
The Finance Minister implicitly indicated he did not agree with that in comments he gave to The Sunday Times. Perhaps that was because the thrust of his comments was that Malta does not need a mini budget at this stage. I agree with the conclusion.
It is a fact that the European Commission has downscaled all the government's economic indicators as projected in the budget. As a matter of fact, we would be lucky if we escape with the Commission's minimalised forecasts, including a real GDP growth expansion seven tenths of one per cent this year. Fresh action by the government needs more definite indicators and developments.
What is required in the short term is for the government not to stifle the private sector with undue bureaucracy and for direct action announced in the budget speech to be implemented.
Ms Ellul put it pithily: Major projects have been outlined, such as the funding for the new Mcast campus and the upgrading of Ħal Far industrial estate, she told this newspaper. "These projects have to be implemented quickly. Not too many studies."
It should be presumed that studies had been completed before the projects were announced in the budget speech. But the tendering process does take time. The point is that there should be no dragging of feet at all, especially where work can be done with the public sector's own ample resources.
Pressure for a mini budget is mounting not least because November's budget was overshadowed by the new energy tariffs.
"I think the budget tried to do a lot of things - but a lot of small things. It did not give a major stimulus to the economy," Helga Ellul told this newspaper.
A fresh stimulus is being mooted in the same breath as suggestions for a mini budget. The first stimulus should lie in the first instance in early implementation of the budget spending proposals. Meanwhile, the government should be examining critically those sectors which require specific help, rather than any broad package aimed at stimulating consumption.
The distribution and retail sector will not like to hear this, but encouraging higher consumption, and thereby higher imports will not offer any real stimulus to the economy. That has to come from exports and real investment.
We are living in tough times which are set to get worse. Economic operators and the government need to react as nimbly as can be and, where possible, to avoid the negatives coming towards us before they impact. Micro and macro decisions have to be well thought out. Otherwise, wrong actions could make a bad situation worse.
Positives do need to be emphasised. They need to be examined to determine why they exist with reasonable promise, notwithstanding the widespread gloom. Whatever the depth of the recession, the bulk of yesterday's economic activity will continue. It is sentiment, aggregate demand and new investment decisions based on it that will take a knock.
The knock cannot be ignored. If it is, it will still break through the walls. Nevertheless one should examine what it is that drives existing operators to lay down new investment. Learning from positives with a view to attempt to emulate the lessons in other sectors is essential in the short and longer term.
It is also important not to allow the gloom not to grow unnecessarily black.
To remind one and all that every situation, no matter how dark, brings its own opportunities. That is what the Prime Minister is implicitly trying to do. That noted, it is more than silly of government spokespersons and fellow travellers, not least the Nationalist media, to attempt to paint a rainbow situation, ignoring the threats that have already arrived and others not far from round the corner.
A number of manufacturers have already been hit by the global recession. Tourism began to weaken several months ago, returning bad results for the fourth quarter of 2008, with worse to come in the current quarter.
This sector, in fact, will probably be the worst hit in the coming couple of years or more. It is in the grip of a double whammy. The general recession weakens demand for holidays in all of our traditional markets. On top of that, the sharp decline in exchange value of the pound sterling relative to the euro will translate into a terrible year as regards the British market, which is still the main driver of the tourist sector.
Actual developments and other forecast woes make it imperative that the sector is revisited. It is not enough to say that the Malta Tourism Authority was allocated extra funds in the 2009 financial estimates presented in November. Four months is a long time in the current state of the economy as it is influenced by events abroad.
The point was made rather kindly by Helga Ellul, president of the newly-merged Chamber of Commerce, Enterprise and Industry. In an interview in last week's The Times Business, aside from saying that last November's budget was overshadowed by the new energy tariffs, she opined that at the time "I think nobody realised just how critical the international economic situation was going to be and so the budget was unable to address this."
The Finance Minister implicitly indicated he did not agree with that in comments he gave to The Sunday Times. Perhaps that was because the thrust of his comments was that Malta does not need a mini budget at this stage. I agree with the conclusion.
It is a fact that the European Commission has downscaled all the government's economic indicators as projected in the budget. As a matter of fact, we would be lucky if we escape with the Commission's minimalised forecasts, including a real GDP growth expansion seven tenths of one per cent this year. Fresh action by the government needs more definite indicators and developments.
What is required in the short term is for the government not to stifle the private sector with undue bureaucracy and for direct action announced in the budget speech to be implemented.
Ms Ellul put it pithily: Major projects have been outlined, such as the funding for the new Mcast campus and the upgrading of Ħal Far industrial estate, she told this newspaper. "These projects have to be implemented quickly. Not too many studies."
It should be presumed that studies had been completed before the projects were announced in the budget speech. But the tendering process does take time. The point is that there should be no dragging of feet at all, especially where work can be done with the public sector's own ample resources.
Pressure for a mini budget is mounting not least because November's budget was overshadowed by the new energy tariffs.
"I think the budget tried to do a lot of things - but a lot of small things. It did not give a major stimulus to the economy," Helga Ellul told this newspaper.
A fresh stimulus is being mooted in the same breath as suggestions for a mini budget. The first stimulus should lie in the first instance in early implementation of the budget spending proposals. Meanwhile, the government should be examining critically those sectors which require specific help, rather than any broad package aimed at stimulating consumption.
The distribution and retail sector will not like to hear this, but encouraging higher consumption, and thereby higher imports will not offer any real stimulus to the economy. That has to come from exports and real investment.
We are living in tough times which are set to get worse. Economic operators and the government need to react as nimbly as can be and, where possible, to avoid the negatives coming towards us before they impact. Micro and macro decisions have to be well thought out. Otherwise, wrong actions could make a bad situation worse.