Fabian Demicoli

A growing Inflation Rate that does not Reflect the True State of the Maltese Economy

Another month, another increase in the inflation rate. At 2.83% inflation in Malta is one of the highest in Europe once countries like Latvia, Estonia and Hungary that enjoy fast economic growth and hence suffer from high inflation, are removed from the average. Once again GRTU states that the Malta rate of inflation is abnormally high as the economy does not reflect the any pressure caused by rapidly growing and expanding economic activity. Inflation should reflect a fast growing output. This is not the case in Malta as both imports and exports are falling and economic growth is stagnant.

A growing Inflation Rate that does not Reflect the True State of the Maltese Economy

Another month, another increase in the inflation rate. At 2.83% inflation in Malta is one of the highest in Europe once countries like Latvia, Estonia and Hungary that enjoy fast economic growth and hence suffer from high inflation, are removed from the average. Once again GRTU states that the Malta rate of inflation is abnormally high as the economy does not reflect the any pressure caused by rapidly growing and expanding economic activity. Inflation should reflect a fast growing output. This is not the case in Malta as both imports and exports are falling and economic growth is stagnant.

Inflation in Malta is not caused by the pressure of economic growth but is caused by increasing costs caused by government induced pressures. Indeed most of these increased costs are not being passed on to the consumers, as current market situation in Malta cannot sustain increased prices for most goods and services.

The increased costs are suffered by owners of businesses and is reflected in reduced profit margins and losses otherwise the inflation rate would be even higher. While profit margins fall and more and more firms register losses the taxation authorities increase the pressure on businesses to pay more and more taxes even if many tax claims are grossly questionable.

GRTU Malta Chamber of SME’s strongly urges Government to give the economy top priority Government policy today is geared towards solving the Budget deficit at all costs. GRTU believes that the top priority should be economic growth.

There will not be any economic growth if entrepreneurs are squeezed out of business.

Government will never solve its Budget deficit problem if the economy remains stagnant.

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