Drop in GDP belies Abela claim of revitalised economy – De Marco

Malta experienced negative growth in gross domestic product during April-June 2021, a second quarter fall of 0.5%, the eurozone’s largest drop in GDP.

Many other eurozone countries showed strong growth figures, with Ireland at 6.3%, the sharpest increase of GDP compared to the previous quarter, followed by Portugal (+4.9%), Latvia (+4.4%) and Estonia (+4.3%). Declines were experienced by Malta (-0.5%) and Croatia (-0.2%).

Malta last experienced a 1.9% growth in GDP in the first quarter.

Shadow finance minister Mario de Marco called out the figures, saying they belied Prime Minister Robert Abela’s claim that Malta would be “cantering” in March once the economy is re-opened following the island’s mass COVID vaccination programme.

“The fact that the Maltese economy has shrunk in the second quarter is of concern when one keeps in mind that the first months of the year saw the government deficit reaching record levels, and public debt growing faster than other EU countries. This is a confirmation of the ineffiency and incompetence in the country’s financial management, with a failure to attract new economic sectors and undermining trust with decisions tha led to the FATF greylisting,” De Marco said.

De Marco noted that government was far from an ‘all hands on deck’ approach to revitalising the economy post-pandemic, but instead was concerned with the effects of the greylisting it had brought upon itself. “This shows the need of a new change towards prudence in the country,” De Marco said.

Malta’s deficit currently stands at 9.8% of its GDP as of quarter 1, the largest proportion of GDP in the EU. It is followed by France at 9.3% of GDP.

But quarter-on-quarter figures show this is the deficit incurred in one fell swoop during the first half of the COVID pandemic in 2020, an outlay of financial spending that sent the deficit soaring to 9.2% of GDP during the first quarter of 2020.

At the end of March, government debt stood at €7,478.2 million, or 59% of GDP, an increase of €1.5 billion over the same quarter back in 2020.