Chamber tells Scicluna not to downplay declining exports

The Chamber of Commerce has claimed finance minister Edward Scicluna has downplayed warning signs of Malta’s declining exports, after he questioned the way statistics were being compiled at the NSO.

The Chamber, which welcomed Budget 2015’s measures, said it did not agree with the minister’s explanation that the reason for declining exports is a drop in external demand. “The Chamber attributes the situation to declining competitiveness levels mainly due to increased operating costs and improved competitiveness in certain overseas countries where the need to defend competitiveness has surpassed all other priorities,” the Chamebr said.

The statistics released by Eurostat show that Malta’s combined exports to EU and extra-EU states declined by 27% in the 12 months to August 2014

 But even the export figures released by the National Statistics Office (NSO) show a decline, albeit by a significantly lower magnitude. In fact, NSO reports a 3.6% decline in exports between 2012 and 2013 (full year) and again by 1.0% between 2013 and the first two quarters of 2014 (quarters 1 and 2).

The Pre-Budget Document published by the Ministry of Finance shows that Gross Value Added (GVA) in manufacturing declined by 4.1% during the first half of this year when compared to the same period last year.

The same document states that real labour productivity per person employed between 2008-2012 experienced a 3.3% drop compared to an increase in the Eurozone (1.0%) and the EU27 (1.1%).

The Chamber said that these warning statistics were corroborated by the industrial production index, which  has been in constant decline since February 2013 with a slight exception for September 2013. In its latest reading for September 2014, the index stood at -7.1 per cent.

“It is therefore the duty of our political leaders and all stakeholders to make a concerted effort to halt this process of deteriorating conditions in the manufacturing sector. Consequently, the Chamber reiterates its call for all stakeholders to engage in an active and exhaustive discussion about Malta’s competitiveness.

“Domestic demand alone cannot be the engine of long-term sustainable economic growth. Lasting economic growth needs to be driven by export-led activity and this requires the country to be competitive. Competitiveness must be at the centre of policy-making if we want to really improve the business environment and build a strong and innovative industrial base, with positive spillover effects in all economic sectors.”