Robust growth for economy, but manufacturing lags behind

Data published by the National Statistics Office shows that the economy has experienced another quarter of positive growth, but the Opposition has flagged yet another drop in the contribution of manufacturing towards GDP growth.

“These conflicting trends show how the Maltese economy in general is growing at a positive rate, but not all sectors of the economy are growing at the same rate, to the extent that the contribution of the manufacturing sector is actually shrinking,” shadow minister for finance Mario de Marco said.

Official figures show that in the third quarter of 2015, the Maltese economy continued to register robust growth, with a GDP growth of 5.4 per cent in real terms and 8.0 per cent in nominal terms.

The rate is the highest rate in the Eurozone, surpassing its average of 1.6 per cent.

“More importantly, official figures show that economic growth was broad based,” finance minister Edward Scicluna said.

“Indeed, during the first three quarters, particularly strong increases were registered in the professional, scientific and technical sector and administration and support activities (17.5 per cent) and the financial and insurance sector (11.7 per cent). Other notable private sector increases were also recorded in real estate activities and wholesale and retail trade and accommodation and food service activities. The very strong growth in the service sectors more than compensated for the marginal decline in the manufacturing sector.”

But De Marco said that government was ignoring the fact that average wages in the manufacturing and construction sectors had decreased over the past two years, apart from the fact that 300 persons are going to be made redundant from De La Rue and that the number of people living in poverty or at risk of poverty has increased in the past two years.

“Our pensioners, who are increasingly finding it more difficult to cope with the cost of living, the thousands of families who earn a living in the construction and manufacturing industries and who are seeing a drop in earnings, and the families of those who are about to lose their job, are probably finding it difficult to relate to the triumphalist tone of government’s press release heralding economic growth,” De Marco said.

The increase in real GDP was underpinned by a considerable increase in investment which increased by 21.5 per cent during the first nine months of 2015 and consumer expenditure increasing by around 4.6 per cent.

“This remarkable growth in investment is in line with Government policy to reform pivotal sectors of our economy and to actively encourage the development of new growth sectors. Both will provide the foundation of further growth in the years to  come. Exports of goods and services also increased by 2.5 per cent in the first three quarters of 2015,” Scicluna said.

Growth in Government expenditure during the first nine months was contained at 1.8 per cent while in the third quarter of this year, government expenditure declined by 5.4 per cent in real terms when compared with the same period of 2014.

“The benefits of this economic growth were not limited to investment and exports but were transmitted to firms and employees. Indeed, it is encouraging to note that profits, during the first three quarters of this year, increased by 11.5 per cent or €300.9 million while salaries in the form of compensation of employees increased by 4.7 per cent or €124.6 million,” Scicluna added.

De Marco said the positive outcome of these results should be aimed at reducing the price of petrol and diesel and bring them in line with the European Union averages, more so now that the international price of oil has gone down below the $40 per barrel mark.

“Such a move will benefit private consumers by improving their purchasing power. It will also help improve the competitiveness of our industries. Government should also follow the advice of the Governor of the Central Bank and use these ‘positive times’ to build financial buffers, which would help the country in times with slower economic growth.”