Stiff competition and an expensive product are contributing to industry’s woes as statistics show that Malta registered a massive decrease of 52.3 per cent in industrial new orders in August when compared with the same period last year.
The Eurostat figures published on Monday paint a very bleak picture of Malta’s manufacturing industry prospects. Malta along with Poland, Slovakia and Hungary were the only EU countries that registered annual decreases in August for total manufacturing working on orders.
But whereas the decline in the three eastern European countries ranged between 4.7 per cent in Poland and two per cent in Hungary, Malta’s manufacturing industry saw a massive drop of 52.3 per cent in orders.
Maltese manufacturing also registered the EU’s largest drop in orders in August when compared to the previous month. Total manufacturing working on orders fell by 20.1 per cent in August when compared to July. Latvia, Germany and Hungary were the other EU countries registering ‘big’ month-on-month declines of 11.8, 4.1 and 3.3 per cent respectively.
1 In July, Malta had also registered a month-on-month decline of 11.7 per cent.
Industrial new orders increased by 8.9 per cent in the EU25 and 7.5 per cent in the euro-zone in August this year when compared to the same period last year.
The highest annual increase in total manufacturing working on orders was recorded in Latvia at 24.7 per cent followed by Sweden and Lithuania that registered increases of 19.2 and 16.5 per cent respectively.
Data released last week by the National Statistics Office shows that during the first nine months of this year the net total of manufacturing sales in Malta was Lm700.9 million, a decrease of Lm65.9 million over the same period last year.
Economists have long been warning that Malta is increasingly losing its price competitiveness leading to lower exports.
In a paper published earlier this month by the Federation of Industry as a reaction to government’s pre-budget document, economist Edward Scicluna reiterated that the economy needs an “urgent correction” to improve its “deteriorating price competitiveness and thus boost exports of manufactures and tourism.”
The latest Eurostat figures can also be seen in the context of GDP figures for the second quarter, which showed an increase in growth of 2.4 per cent that was, however, heavily influenced by an increase in the amount of inventories. This could mean that although the country is producing more it is not managing to sell its produce.