Between the lines of the CBM report

The Central Bank quarterly reports on the performance of the Maltese economy are closely watched by economists as well as politicians who, from different perspectives, try to interpret what the clinical economic figures say as well as reading between the lines of the narrative. The latest CBM report for the third quarter of 2016 confirmed that the Maltese economy grew by three per cent – double the EU average. Similarly inflation is on the increase while unemployment is well under the EU average. This is all good news. But economists with their feet firmly on the ground need to ask some questions to see whether the long-term economic prospects are just as good as the current short-term figures indicate. Malta's economic growth in the last few years has been driven mainly by the services sector and by property development, with manufacturing continuing its slow but sure decline. Admittedly, some new investment in manufacturing, like the new banknote printing project part of which is guaranteed by government, shows that there is still space for manufacturing investment. Malta's low-tax regime is possibly the most important competitive advantage that has attracted investment in...

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