Fabian Demicoli

Businesses optimistic for 2020, Political instability and reduced profitability negatively affected 2019

Overall business performance during 2019 was mostly in line with expectations, reflecting an economy that was projected to slow down slightly. On the other hand, factors that left their mark on 2019, and which were not foreseen were clearly the political, and resultant economic instability and lower profitability. These two factors, in fact, also rank high in terms of concerns businesses cited for 2020, together with labour shortages. These figures emerge from an online survey conducted by the Malta Chamber of SMEs.

Whilst political instability was at its high mainly during the final months of 2019, unfortunately, it also coincided with the most important business period for the majority of enterprises. This phenomenon adversely affected client spending with Christmas shopping starting later than usual (closer to the 24th December rather than the previous week) while Black Friday scored below expectations for more than half of the respondents. Even though this trend was observed across all of Malta, Valletta operating outlets suffered the most. Electricity outages during this same period were also cited as another contributor of these disappointing results.

The respondents cited owner led initiatives such as new investments and marketing, increased consumption and staff training as some of the main drivers were positive performance was experienced.

The political situation, lower profitability, unfair competition, increased local competition, traffic congestion and parking featured high as contributors to negative performance.

60% of enterprises running January sales or discounts stated that business performance was in line with expectations. The rest of the respondents, excluding 4% that claimed that performance exceeded their expectations, stated that business started slower than expected in 2020.

The majority of businesses do however have a balanced to positive outlook for 2020. 75% feel that in 2020 they expect that business performance will be the same as in 2019 and some even expect it to improve. The remainder fear that business performance will worsen. This feeling of confidence can most likely be attributed to positive political developments witnessed from the second half of January.

 

Methodology:

The Malta Chamber of SMEs’ Business Performance Survey was conducted between the 9th and the 24th of January and gathered over 300 business responses. Participating enterprises came from a wide variety of sectors across Malta and Gozo. 69% of respondents qualify as micro enterprises, 22% as small and 9% employ over 50 employees.

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