Developments in the global economy, including “elements of overheating on the domestic front” could lead to a restrained growth rate in activity and employment in Malta “to more sustainable levels in the medium term”, prominent local economist Gordon Cordina said in an opinion piece published in the Economic Vision.
He remarked that Malta’s economic activity and employment growth rate have been “among the best throughout the EU”.
Dr Cordina stressed that “it is imperative for this to happen in an orderly and managed manner, while sustaining competitiveness and all the elements in the social and environmental fabric that underpin the quality of life.”
He remarked that this would necessitate a resilient economy in the face of a potential slowdown in export demand in the coming years.
“The international economic scene has recently taken a turn for the worse in response to a number of events, not least trade disputes and the apparent weakness of the EU in maintaining a cohesive economic bloc.
“Safeguarding the structural fiscal surplus and a continued decline in public debt levels to GDP will be crucial in this regard, to ensure that the country retains a buffer of resources to be tapped into should the need arise,” he said.
Dr Cordina turned his attention to the importance of sustaining Malta’s underlying fundamental competitiveness, especially in sectors that are generating consistent growth. He said that this is “another essential requirement to enable [those sectors] to withstand eventual downturns in the economic cycle.”
“This is equally true for tourism, where we need to up our game, including through the better skilling of our human resources in the sector, and in financial services, where better regulation is called for to ensure future sustainability and reputation.
“It is also especially relevant for the construction sector where the ongoing boom in demand needs to sustain a significant upgrade in the quality of the product being delivered, to guarantee the international marketability of the real estate available in Malta and, consequently, its ability to attract the skilled human resources that the economy needs in order to continue to grow.”
On goals for the future, Dr Cordina stresses the need for Malta to “sow the seeds for the growth of new sectors of avctivity,” thereby ensuring growth on a ‘longer-term’ cyclical basis.
“These sectors must be fundamentally grounded in the competitiveness advantages that our economy can offer on the international plane, equally as a Mediterranean small island as much as a member of the euro area.”
He called for a “clear vocation” of promoting innovative activities, as well as transforming Malta “into a hub where the global community can work, relax, learn, heal and engage in creative activities.”
For this to happen, Dr Cordina said a focus must be placed on “the fundamental pillars” of the residential attractiveness of Malta.
This, he added, includes “economic, human, infrastructural, social, environmental and institutional capital.”
“I look forward to a time when we will be able to measure our economic success by considering progress in each of these aspects of investment in our economy and our society.”
Dr Cordina rounded off his opinion piece by calling for added attention to be placed on “reducing absolute and relative poverty as much as possible, which are often inevitable consequences of periods of rapid economic growth.”
“And this, of course, leads us to the consideration that the economy and economic growth are never ends in themselves but means towards promoting fundamental human well-being. In this respect the country is being called to make sacrifices, which should result in longer-term benefits for society.
“Finally, I think that our country is now ready, on the basis of the growth and development over the past few years, to be more discerning in terms of the investment programmes on which it embarks, and which should serve us in good stead over the years to come.”