Low public debt and high bank liquidity keeps Malta afloat in choppy waters

Chamber-BOV conference evangelises for greater resilience, digitalisation, and focus on ESG criteria

The panel at the Chamber-BOV conference
The panel at the Chamber-BOV conference

Malta’s low public debt and high bank liquidity is allowing the island to meet the challenge of high energy costs and interest rate shocks after the 2021 pandemic, a Chamber of Commerce conference heard yesterday.

Bank of Valletta’s senior manager of economic Malcolm Bray told the Chamber conference that Malta’s strong growth in 2023 has contrasted with the sharp deceleration recorded abroad.

“The current consensus suggests that over the next years, Malta’s economic momentum will continue to exceed that in the euro area. This benign outlook reflects the transformation undertaken over the years, which has made the economy more diversified and thus more resilient.”

The conference explored recent and expected economic developments and the upside and downside risks surrounding Malta’s strategic outlook.

In his opening speech, Nick Xuereb, Deputy President of The Malta Chamber, highlighted the key challenges and economic realities that businesses will face in 2024.

“We should help and support businesses in improving efficiency and productivity. As inflation shows signs of decreasing, it is crucial to implement the right measures proactively, positioning ourselves ahead of the curve rather than lagging behind,” said Chamber deputy preside Nick Xuereb, who appealed for critical investment in digitalisation in both private and public sectors.

“Since human capital will remain a persistent challenge in 2024, the overarching goal should be to steer our country towards emphasizing quality over quantity. Given that our businesses operate in a broader competitive landscape, we cannot afford to ignore external developments.”

Chamber CEO Marthese Portelli said Malta’s inflationary pressures had been imported through air freight and sea transport costs, its reliance on imported raw materials, imported labour, and regulatory burdens from the European Commission.

With tourism and manufacturing showing remarkable resilience, Portelli said a key strategy for enhancing productivity in these sectors was to optimise efficiency by doing more with fewer resources. “This approach not only fosters sustainable growth but also enhances competitiveness and overall economic performance,” she said.

Bank of Valletta CEO Kenneth Farrugia, in closing, said Malta’s economy had gone through significant positive developments in the face of challenges that had tested its resilience.

“The future strategic thrusts supporting our economic development need to be driven by the critical principle of sustainability, within an overarching ESG context. This focus will in turn undoubtedly bring about social wellness and stronger governance,” Farrugia said.

“We all need to play an active role in shaping the future of our economy and where we constantly need to ask ourselves whether we are doing anything, or enough, in the process. Bank of Valletta intends to remain an important catalyst in this regard to foster greater engagement and collaboration between the key stakeholders for the benefit of generations to come.”