Malta in ‘theoretical’ recession

By Miriam Dunn

With Malta heading for a recession, at least on paper, the need to encourage new investment into Malta has never been more important.

The director general of the Association of General Retailers and Traders, Vince Farrugia, highlighted the recent interventions made by the monetary authorities which, he said, were clear signs that the economic situation at present was worryingly bleak.

"The rate at which Malta’s GDP is falling and the unsustainable level that the balance of payments has reached clearly shows us that the island is, at least in theory, heading for a recession," he said.

Mr Farrugia pointed that in its submissions for Budget 2000, the GRTU had urged the government to address the economic balance and tackle the bleeding balance of payments.

"The focal aims must be to look at how to sustain investment and encourage growth," he said. "We need to make sure that all actions produce economic value."

Turning to the cashflow crisis that the country is currently gripped in, Mr Farrugia said the present crunch was an indication of falling investment.

"We have to look at how we can sustain liquidity," he explained. "There simply isn’t enough money around to pay for purchases, which is an indication that less earnings are coming from overseas." Mr Farrugia warned against the danger of failing to look seriously at how to deal with the crisis.

"It isn’t enough for people to keep their fingers crossed. We cannot take risks with the economy," he said. "We need to work out where the opportunities are and grasp them. Not rely on unfounded optimism."