NEWS | Wednesday, 21 May 2008

Tonio Fenech launches Economic Bulletin

Tonio Fenech, Minister of Finance, the Economy and Investment stated that despite significant challenges for the Maltese economy, including the international financial crisis, the massive increases in the price of oil and the ever growing competition by Malta’s neighbouring countries, 2007 has witnessed an excellent performance by Malta’s s economy.
In a press conference launching the “Economic Bulletin - May 2008”, the Minister indicated key figures that demonstrate Government’s success in managing the economy. Most importantly that: Gross Domestic Product (GDP) increased by 3.8 per cent in real terms; Tourist departures registered a 10.6 per cent growth; Government deficit has been brought down to 1.8 per cent and that unemployment rate fell by 0.6 per cent.
The Minister pointed out that this success is not the result of a one-off year, but rather the momentum for economic growth has been gaining ground since 2005. GDP growth during 2007 was mainly underpinned by developments in domestic demand, particularly, private consumption. The external sector also contributed towards economic growth, mainly reflecting a decline in the contribution of exports that was outweighed by the decline in the contribution of imports.
A strong recovery in the tourism industry was recorded during 2007 when tourist departures increased by 10.6 per cent. Data for the first two months of 2008 indicate that this positive performance has been sustained. These developments were reflected in an increase of 9.4 per cent in gross foreign exchange earnings, reversing the negative trend recorded over the past years. Furthermore, during 2007 cruise passenger arrivals registered a 21.4 per cent increase over the level recorded a year earlier and arrivals registered in the first two months of 2008 illustrate further positive performance by the cruise passenger industry.
During the twelve months to November 2007, the labour market registered encouraging results. The full-time gainfully occupied population rose by 2.2 per cent, driven by activity in the private sector, whilst the unemployment rate fell by 0.6 percentage points to 4.4 per cent, being the lowest level in recent years. Moreover, part-time employment maintained an upward trend and rose by 8.3 per cent over the level recorded in November 2006. In December 2007, the HICP inflation rate stood at 0.7 per cent. After the third quarter of 2007, the inflation rate started rising and in February 2008, the HICP 12-month moving average inflation rate stood at 1.2 per cent. It is pertinent to note that the domestic inflationary outlook remains highly sensitive to developments in international commodity and fuel prices.
As a result of the fiscal consolidation programme implemented in recent years, the general Government deficit followed a downward trend, reaching 1.8 per cent of GDP in 2007. Government intends to maintain this declining trend over the coming years, in line with its fiscal consolidation programme, in order to achieve surplus by 2010.