this week: The times they are a-changin
Everything to gain and everything
Malta as a country stands teetering on the edge of a brave new world
where the only future certainty that remains is uncertainty itself.
On the one side of the edge stands Maltas former protectionist
past - now well put behind us - while on the other lie in wait the new
realities of EU membership, the prospect of increasing taxation, the
pensions time bomb and scores of old and new sets of fiscal problems
to torment the countrys delicate economy.
Maltas closest European neighbour, and one of the countrys
single largest trading partners - Italy - dipped into a technical recession
on Friday when it was announced it had registered negative GDP growth
for the second quarter running this year. Other EU members are also
facing the threat of recession, with Italy's figures making it more
likely that whole eurozones second-quarter GDP will contract for
the first time since the last quarter of 2001, when the 11 September
attacks had depressed economies around the world.
But while Maltas GDP growth at present remains in the black, the
state of public finances is beginning to lose some of its pre-electoral
whitewash as the grim undercoating is revealed. This problem alone stands
to create a ripple effect that could, in time, send Malta too plunging
into a recession.
Public expenditure is also facing new demons in the form of forking
out for accommodating the growing masses of illegal immigrants, for
which the country should be expected to pay a sum proportionate to its
EU neighbours who are also burdened by the phenomenon.
Also threatening to wreak havoc on Maltas finances is the countrys
long-ignored environmental degradation, which will have to be addressed
significantly by public funding lest Maltas tourism product, and
indeed the health and quality of life of future generations, is sacrificed
on the alter of neglect.
The message is clear: the good times are over and EU accession will
not be the bed of roses that many had dreamt of unless our public and
private sector leaders do some serious soul searching.
Maltas pensions times bomb, ticking away furiously under the carpet
it seems to have been swept under, ticks more ominously by the day and
taxes will inevitably need to be raised, directly or indirectly, to
offset future pay outs.
Maltas and the worlds equity markets no longer present many
investment opportunities and as Maltas investors turn back to
solid brick and mortar investments, property investment potential appears
to be running through investors fingers like so much dry mortar.
Undeniable is the fact that Maltas property market has been artificially
inflated by the prospect of EU membership and when these investors find
that hoards upon hoards of Europeans will not, in reality, be so keen
to scoop up whatever the market has to offer, they will suffer losses
that cannot be reinvested.
But all is not doom and gloom and to buffer against these threats Malta
must seize the opportunities being served up on the metaphorical silver
platter with all due haste and attention.
If this is done in a proactive fashion, Malta has everything to gain,
but if our actions remain response-driven, Malta has everything to lose.