072_G19_InFocus_Malta

Global

In Focus Malta Bucking the economic trend Despite a controversial cash-for-citizenship scheme and an ‘unsustainable’ health sector, tiny Malta is still punching above its weight when it comes to its economy Herman Grech When Malta’s new Labour government introduced a ‘cash-for-passports’ plan intended to raise millions from well-heeled foreigners, it inadvertently found itself having to fend off collateral damage amid potentially damaging international news headlines. Germany’s Die Welt’s headline read ‘Cash-strapped EU countries hawk their passports’, while Italy’s La Notizia was even more alarming: ‘With its cash-box empty, Malta puts its citizenship up for sale’. International media described Malta’s so-called Individual Investor Programme as a money-making scheme that had more in common with a banana republic in the Caribbean than an EU state. But the foreign media was ignoring one simple fact: Malta was one of the few southern EU countries that managed to avoid the fi nancial meltdown. To ward off the bad publicity, the Maltese government simply cited offi cial statistics to show its economy was in no dire straits. In the fi rst quarter of 2014, Malta’s economy outstripped the EU average and grew by 3.5 per cent. The European Commission’s latest economic forecasts expect the Maltese economy to continue to grow ‘robustly’ in the coming two years. Despite an increase in the number of jobless in the last year, Malta has the sixth lowest unemployment rate in the EU. Defi cit is the ominous word that has dominated the political landscape ever since Malta adopted the euro in 2008 and bound itself to reducing the fi scal imbalance below three per cent of GDP. Last year the defi cit was cut to 2.7 per cent and the government is targeting a further drop to 2.1 per cent this year. This reduction is taking place as Malta slashes its top income tax rate to 25 per cent from 35 per cent over three years. As competing tourist destinations like Cyprus and Egypt face devastating crises of a different kind, Malta has gained signifi cantly in terms of numbers. The introduction of low-cost airlines, like Ryanair and Easyjet, provided a haven for tens of thousands of foreigners seeking the warm Mediterranean climate. Tourist arrivals last year exceeded 1.5 million, a 9.6 per cent increase on 2012, while hotel bookings were up by 8.7 per cent. Tourists spent €1.4 billion, an 8.6 per cent increase on the previous year. And The creation of jobs in the tourist industry has offset job losses in agriculture and fi sheries 72 l www.global -br ief ing.org four th quar ter 2014 global


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