EDITORIAL | Wednesday, 18 July 2007

Import and export woes

The latest statistics published by Eurostat have highlighted our extremely bad performance in the import and export sectors for the first quarter of this year. In fact, the figures show that we top the list of all EU-27 countries in export and import decreases of 5.7 and 3.4 per cent respectively. When one compares the latter figure to Latvia’s astounding 12 per cent increase in the import sector then you will notice that there is something, which is going wrong.
As a country, which prides itself on its high end-manufacturing base, the recent closure of factories must be having some effect on our Gross Domestic Product. A fall of 5.7 per cent in this category (compared to a rise of 4.8 per cent in Slovenia) is an indicator that our factories and producers could be slowing down
This does not appear to tally with the recent investments made by companies such as Lufthansa Technik and other similar large international companies so one hopes this is only a temporary blip on the horizon. However it is definite that all the talk, which seems to dominate the political agenda at the moment cannot solely sustain our economic growth. We have to start producing tangible figures instead of the usual grand talk.
And even where imports are concerned, the situation is worrying. With the first quarter’s substantial drop is an indication that importation of machinery and other equipment is declining, these are the tools, which are essential for the continued expansion of our industrial base. This drop can also mean that there are less demands for consumer goods which is in itself an indication that there is less spending power around.
The good news is that our GDP growth still appears to be on a solid footing with a rise of 0.9 per cent in the first quarter of 2007 compared to the 4th quarter of 2006. And if one had to compare the growth to the first quarter of 2006, the results are even more impressive with a jump of 4.5 per cent this year. So although we have some tinkering still to do, our growth does appear to be rising constantly and sustainably.

Pre-Budget wish list
As the government prepares to announce the pre-Budget document on Saturday, Business Today wishes to bring to the attention of the Prime Minister a few points, which need to be present if the forthcoming budget is going to be a success.
Although last year’s tax cut was welcome, it has definitely not been enough to stimulate the economy into some sort of positive performance and real disposable income. There should be further (and more substantial) tax reductions to make the burden lighter for all.
The document should provide real and tangible business incentives for small start-ups which are increasingly being overlooked despite much talk of ‘being open for business’. Something must be done to reduce start-up costs and to eliminate bureaucracy, which is one of the major strangleholds on making a small enterprise successful.
The airport tax should be done away with forthwith. It is a humiliating and unnecessary tax, which does not have any real effect on governemnt’s revenue and its removal would definitely stimulate growth in outbound tourism.
The document should also include a complete re-think of the part time issue which is soon to become law wherein part timers begin receiving benefits after just 8 hours work per week. Some sort of incentive for employers should be produced to balance out the heavy administrative cost involved in this crucial sector of the labour market.
And finally, government should embark on more social housing projects, if possible in partnership with the private sector in order to give first time buyers an opportunity to get onto the property ladder. Next to nothing is being done for the vulnerable persons who can no longer afford to buy their first home. The government has a social obligation to act before it is too late.