In a document issued by the chamber of Commerce aimed at political parties for the upcoming general election, the Chamber of Commerce has warned that although Malta’s economy has grown rapidly in the past ten years, economic growth is being based on labour force growth and not efficiency and productivity rates.
Malta’s economy has indeed grown thanks to local consumption and the Labour government intends to incentivisise this local consumption further with direct subsidies.
The Chamber of Commerce is warning that this economic model is becoming unsustainable with lack of infrastructure growth leading to congestion, and lower quality of life. The Chamber is estimating that last year Malta lost up to €770 million due to traffic congestion. Transport congestion is the most visible consequence of the ongoign stress on the economy and the infrastructure.
The Chamber also warned that although Malta’s deficit is currently being managed in line with Maastricht criteria, the continued increase of debt is dependent on economic growth and the public finances can go through significant stress if this economic growth abates.
The Chamber has presented a study showing that foreign companies in Malta are more efficient and attributed this due to their tax privileges allowing them to invest even more in their operations and business. It also warned that local companies are disadvantaged by a lack of capital liquidity that enables their further growth.
With full employment, the Chamber warned there are challenges sourcing skilled workers and this is also limiting productivity gains. In order to address the skills-gap between the demand in the market and the available labour supply, the Chamber is urging for increased education in a targeted and systematic manner.
The Chamber of Commerce finally warned that local constraints are growing as the international situation grows increasingly challenging.
You can download the Chamber’s document here.
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