Edward Scicluna

European Commission notes that wind in Malta’s sails gaining strength

The Finance Ministry welcomes the remarks by the European Commission, as presented in its European Economic Forecast for Autumn 2013, published on Tuesday 6th November, 2013.

The Commission’s remarks are further validation that the Maltese economy is gradually picking up speed, thanks to the prudent fiscal administration and forward-looking policy approach of the new Government.

The Minister for Finance Prof. Edward Scicluna said that “it is quite telling that the Commission carried over the metaphor of the strength of the wind in Malta’s sails, which I had described to them in our meetings last April as being quite feeble. I had in fact asked the Council not to impose any corrective actions which would stall our boat.”

The Commission notes that Real GDP surprised positively by growing by 2.8 per cent in the first half of 2013, up from 0.8 per cent in 2012.The Commission also notes that Real GDP is forecast to grow by 1.8 per cent in 2013 as a whole, and 2 per cent in the following years. These rates exceed the Government’s own prudent forecasted rates.

The Ministry welcomes the Commission’s remarks regarding Job Creation and Employment, wherein it noted that “Job creation surprised positively in the first half of the year thanks to the tourist sector and the newly-emerging, labour-intensive activities in the services sector.”

 

 

Regarding the labour market reforms, the Ministry is especially pleased to note that the Government’s commitment to increase the labour market participation of women through initiatives such as free child care centre services for working parents are being especially recognised by the Commission.

Indeed, the Commission notes that “employment growth is projected to moderate slightly over the forecast horizon, but to remain relatively strong at 1.8 per cent per annum, well above the euro-area average.”

The Ministry also takes seriously the Commission’s remarks that the deficit in 2013 is expected to increase slightly to 3.4 per cent of GDP, and remain constant for the following year also. It notes that the Commission concluded its forecast before the presentation of the Budget 2014, and prior to the full report of the Commission on the Draft Budget to be completed by the 22nd of November.

The Ministry is confident that the Government will close 2013 with a deficit of 2.7 per cent and is committed to further lowering the 2014 deficit to 2.1 per cent.

The Ministry also welcomes the Commission’s favourable position on a number of structural reforms which the Government undertaking – most notably in the energy sector, which the Commission notes “are likely to drive down industry costs if properly and timely implemented, and strengthen the medium-term growth outlook.”

Finally, it is a first that the Commission states that the risks to its forecast for Malta for 2013 are “on the upside”, meaning that the current outlook could turn out much better than projected.

 

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– Friday, 8th November, 2013

 

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