Editorial | Looking ahead with trepidation

The end of 2019 is a sour one for Maltese business – not beacuse of economic policy and planning but due to a political crisis of immense proportions.

Though it has to be said that 2019 was indeed great for economic growth.  But that all went haywhire with a political crisis of unimaginary dimensions and ramifications that left the popular Prime Minister Joseph Muscat announcing his resignation in the face of serious accusations linked to the investigation into the murder of Daphne Caruana Galizia.

But let us look at the growth patterns in our economy spearheaded by a business friendly neo-liberal Labour government which always looked at growing the economy.

Unemployment figures were at an all time low, with a scarcity of skilled employees and an endemic difficulty in finding the right personnel for the right vacancies.

The building industry was entering a low period with 30 to 40% slowdown after two years of unprecedented growth.

Tourism continued to show an upward trend with incoming and outgoing tourism reaching new highs.

The country registered a €5.5 billion revenue with a €140 million surplus.  On all fronts, increments of revenue were recorded: 10 per cent in VAT income,  3% customs and excise income, income tax up by 18% and contributions by social contributions also on the rise – mostly as a result of the high number of foreign workers.

Consumer spending showed very little signs of a downward trend and new projects in the pipeline were a constant.

The outlook was also positive with the economy expected to grow in real terms at 4.3 per cent. The surplus for 2020 is projected at 1.4 per cent. And this will be the fifth consecutive year that public finances will record a surplus – even without the IIP funds, better known as the Golden passport scheme.

The debt-to-GDP ratio in 2020 is slated to drop to 40.4 per cent and for the third year running, there will be no tax increases.

Muscat as premier has made this happen and his political demise is a shock to all those who saw him change the dynamic of Malta’s economy.

In short, the economy in 2020 was expected to grow to €14 billion.

But will this continue?

After Muscat’s fall from grace, a new prime minister will be installed by mid-January

But the question everyone is asking is very simple.

Will contenders Chris Fearne and Robert Abela be able to maintain the pace of economic growth?

We dearly hope that this will be upheld with actions rather than words.  And that the strengths – not weaknesses – of the Muscat administration are rekindled.

We also need to work hard to inject new impetus to our standards of reputation as a country to sustain growth and bring back normality. In this regard, the opposition and civil society have a role to play.

If our financial services are permanently dented because of this crisis we are surely to lose out as a country.

This small island state cannot take a battering from all sides, which means that we must come together for the good of this small nation.

Easier said than done. But we need to act sensibly and responsibly.