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James Debono
Prospects for an economic turnaround in 2006 are dim, according to respondents in MediaToday’s end of year survey.
As much as 56 per cent of respondents expect no improvement over the poor economic performance in 2005.
Most respondents remain pessimistic in their economic outlook for the New Year, despite the government’s constant reminders that the economy is recovering.
Just under half of the respondents, 43 per cent, think that the economy will fare worse in 2006 than it did in 2005 while 13 per cent expect the economic performance to remain the same.
Considering that 2005 was far from a rosy year for the economy, the survey is a clear indication of the public’s lack of confidence.
Only 25 per cent believe that the economy will fare better in 2006.
Official statistics may confirm that the economy grew during the second and third quarter of 2005 after two consecutive quarters of decline. Economic decline in the last quarter of 2004 and the first quarter of 2005 prompted economist Edward Scicluna to sound the alarm bells: the country was in a recession. The government has cited growth in the following two quarters to dismiss these claims.
Yet according to the Central Bank quarterly review, growth during the second quarter of 2005 was “driven principally by investment spending and inventory changes.”
Replying to questions by this newspaper in October, the National Office of Statistics interpreted the massive rise in inventories during 2005 as an indication of an overall higher stockpiling by the business community, an indication that goods are not being sold or exported.
The only two sectors to experience growth in 2005 were the banking sector and construction.
In its review the Central Bank noted that consumption and net exports continued to follow a downward trend.
As expected MLP-oriented respondents were the most gloomy but pessimism was also shared by those who are still undecided on who to vote for and those still bent on not voting in a forthcoming election.
Less than a fifth of these two categories’ respondents are optimistic on the country’s economic prospects in the New Year.
Not surprisingly Nationalist oriented respondents are less pessimistic. Yet less than half the number of respondents opting for the PN, think that the economy will fare better this year.
A substantial 26 per cent of PN-oriented voters would not commit themselves on whether the economy will shrink or grow next year.
The Greens are equally split between optimists and pessimists.
Political scepticism on the government’s ability to steer the economy to greener pastures could be one of the factors fuelling the general climate of doom and gloom.
Surprisingly, the same survey had also indicated that the Nationalist Party is slightly more popular than the MLP and the Prime Minister enjoys more trust than the leader of the opposition.
Yet the majority of undecided respondents are pessimistic in their forecast for the Maltese economy in 2006. This shows that a majority in the country does not share the Prime Minister’s upbeat mood on the economy.
The impact of globalisation on Malta’s bludgeoned manufacturing sector, could be another factor fuelling pessimism.
But the Maltese are not alone in being pessimistic on economic prospects in a world shaken by a fuel price hike and growing uncertainties accompanying globalisation.
According to the global poll of expectations conducted by the Economist Intelligence Unit for 2006, pessimists on the economic outlook have edged ahead of optimists.
Methodological Note
416 respondents were chosen randomly from the telephone directory. 297 accepted to be interviewed. The survey, which has a margin of error of +/- 5.7 per cent, was held between 29th November and 1st December 2005. The results of MediaToday’s end of the year survey was published in various editions of BusinessToday and sister paper MaltaToday throughout December.
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