Though the economic growth of Malta has slowed down when compared to last year, the Maltese economy is still expected to outperform the average in the EU27. This is according to a report from the European Commission for Economic and Financial Affairs which was published late last week.

The data shows that the economy in the European Union is currently in a mild recession and will likely contract by about -0.3% of the GDP by the close of 2012. However, for Malta, that forecast is not exactly true. By the end of 2012, the Maltese economy is expected to grow by 1.2% of the GDP and has a 2.0% increase expected throughout 2013.

Other information from the Commission includes positive forecasts in other areas of the Maltese economy as well. Inflation is expected to remain at about 2.0% through the rest of 2012 which is also lower than the EU average of 2.4%. There is also an expectation of increases in both imports and exports. However, not all of the news is rosy. The Commission is also expecting a slowdown when it comes to tourism for Malta compared to last year and are also expecting employment to slow down to 0.6%. In 2011, the employment rate was 2.4%.

When it comes to the finances of the government more debt is expected for Malta. Though the Commission agrees that the efforts of the government to lower the deficit to 2.6% of the GDP, debt for the island is expected to reach about 74.8% which is an increase of about 2.8% from 2011. According to the Commission, both the debt and deficit outcomes should be a bit higher especially due to the restructuring efforts of Air Malta. Other things that should be having an impact include the financial situation of Enemalta and the renewal of the public service wage agreement.

When it comes to education, Maltese students are leaving school earlier than other students in the EU according to the Eurostat Yearbook, which was published late last week. The Yearbook is full of different types of education statistics and shows that Maltese students are more likely than others in Europe to be considered “early school leavers”. The definition of an early school leaver are those who are between the ages of 18 and 24 who have only completed a minimum of lower secondary education and who have not had schooling in the past month. The European 2020 strategy has said that they would like each country to have a percentage of “early school leavers” to be less than 10% by the year 2020.

When looking at the current stats from other EU27 nations, the average was 14%. The countries with the lowest percentage, all at 5% include the Czech Republic, Slovakia, Poland and Slovenia. Malta is currently sitting at 37%, the highest. After Malta, the highest are Portugal at 29% and Spain at 28%. Throughout the EU, about 12% of women and 16% of men are considered early school leavers. All member states have a higher number of men than women considered early school leavers with the exception of Slovakia and Bulgaria.

About 79% of the EU27 population between 20 and 24 years old have gotten at least some type of upper secondary education. Malta was the lowest, with only 53% of 20 to 24 year olds getting upper secondary education. However, when compared to the likes of Poland, who is at 91%, the Czech Republic at 92% and 93% in Slovakia, the 53% is certainly not something that Malta is proud of. This is something that the entire country should take to heart and begin putting more focus on education.

A company that is based in the Netherlands has announced that they are opening their aircraft “cosmetics” company right here in the Malta Aviation Park.  Prime Minister Lawrence Gonzi and Finance Minister Tonio Fenech announced late this week that the company, called “Aviation Cosmetics” was relocating to Malta. The owners of the company, which specialises in aircraft cabin refurbishment and external aircraft painting, have put €22 million into the economy thus far through this relocation. This is certainly something that should be celebrated throughout the Maltese aircraft industry.

Dr. Gonzi was quite pleased with the arrangement and gave a short speech that focused on that. He stated that this was an excellent testimony to the success that Malta hopes to achieve in the aviation industry. He announced that there are currently over 1000 people who are employed by this industry and with this new company coming into the country, even more employment opportunities will become available. He also said that this proves that the country of Malta is attractive to investors and the vision that the government has worked so hard to achieve is beginning to take shape. There have been 130 projects approved in the past 4 years that have the potential to create a further 3400 jobs.

Finance Minister Tonio Fenech said that this announcement has injected new life into the economy and the aviation industry will certainly benefit from this. This announcement, according to Mr. Fenech, has allowed the government to achieve a short term goal and given a long term potential. He went on to say that this company’s decision to expand into Malta would help it to expand its market away from Europe. Malta is an ideal place to start this with its access to northern Africa and the Middle East.

Finance Minister Tonio Fenech delivered a speech this week on the Budget Measures Implementation Bill and closed with news of the latest report from the International Monetary Fund (IMF). Mr. Fenech says that the IMF has called Malta’s plans for the future and the effort the country is putting out to reach financial stability is “impressive”.

The IMF publishes information monthly and its 1 May publication reported Malta as being one of the 6 countries in the developed world that had increased its employment rate throughout the month of April.  After announcing this information, Mr. Fenech said that this progress is proof that the Maltese government has made up a budget that is focused on stability and economic growth. This budget is one that offers incentives to industry as well as to the tourism industries, something that are both important to the Maltese economy. Additionally, there are tax reduction schemes for working parents and to parents who are sending their children to private nurseries and schools. The government has also increased its benefits to the elderly which is important to the middle class.

Mr. Fenech also announced that the Maltese national debt was standing at 72% of the GDP when using the EU methodology. This does not include guaranteed debts of independent organisations of the books. He stated that if the opposition party was governing, it would have included austerity measures based on the pretext that debts were not officially announced.

The speech continued by Mr. Fenech stating that the reason for uncertainty for investors was due to the change in government and not the way the parliamentary vote was taken like many believe. He backed that up by saying investors knew that the party was supportive of the business but they were not sure about the stand of the opposition.

At one time, the Maltese property market was booming. Property was selling easily, both buyers and sellers were getting great value and investors and speculators were leading the charge. Today, however, the landscape has certainly changed, but not as much as many countries, which is one more example how Malta has shown perseverance through the bad economy.

Some experts claim that this is because Malta is a small, island nation and that there is just not enough land and property to stay empty due to the high population. Malta also has a culture that is focused on home ownership and combined with everything else, prices should remain stable.

There is really no denying that home prices have changed since the European crisis came into play and falling prices are everywhere, in both cities and small towns. Some, of course, have seen larger price drops than others which shows that location can definitely have an impact on housing prices.

The other good thing for Malta is that these stable home prices are good for the economy. When property prices fall too low, the owners will fall into negative equity. This means that the value of the home is less than what you owe on the mortgage. This is what happened in the US which is why their economy struggled throughout the past few years. Many owners simply stopped paying their loans and allowed the banks to repossess the property. Banks are not property developers and don’t want the homes on their books so they sell them off at a discount. This becomes a very vicious cycle and luckily, Malta is fairly certain to not have to be a part of it.

The housing market in Malta is still going strong when compared to other nations and this is something that we can all be proud of.

The number of Maltese women who are now employed outside of the home has risen 1% over last year to 8.2% according to a study that was done out of Brussels. It is thought that the main reason for this increase is that more women are taking advantage of incentives given by the government by entering the labour market. However, since more women are going into the workforce, short term, this could have an effect on unemployment. Malta has held on to relatively good unemployment numbers throughout the crisis, but since more women are entering the work force, more are counting when it comes to unemployment numbers which could raise them slightly.

Looking back to figures from 2005 and 2006, the rate of women in Malta who are in the work force shot up by about 6.7% and by 2010, about 41.6% of the women in Malta were employed. As more women study at university, which is what statistics show, this number will continue to rise. In fact, more companies throughout Malta are offering family friendly employment options and offering more flexible hours for Maltese working mothers. This also helps to bring more women into the work force.

When looking at unemployment overall, March numbers show an unemployment rate of 6.8% which is the same as February 2012 but up from March 2011 when it stood at 6.3%. Compared to the Eurozone, however, whose unemployment numbers are sitting at 10.9%, Malta is doing quite well. Malta has the fifth best unemployment figures overall and is behind Austria, the Netherlands, Luxembourg and Germany.  Greece and Spain are still showing the worst numbers at 21.7% and 24.1% consecutively.  These numbers indicate that about 24.7 million men and women in the EU are currently unemployed and when compared to 2011, 2.1 million more were unemployed.

Maltese Foreign Minister Tonio Borg is in Libya this week to discuss a Maltese ship that has been detained in a Tripoli harbour.  The ship, called Azzurra, has been in the harbour for almost 2 weeks now and has been held due to claims of a Libyan businessman that the ship contained illegal contraband. However, according to Libyan authorities, nothing illegal has been found on the ship. Maltese officials, like Foreign Minister Borg, say they understand why the ship was investigated, but do not feel there is any reason to hold the ship for that long when nothing has been found. This incident could push back the efforts that have been going on by Malta to build a stronger foreign relationship with Libya.

Three Maltese crew members were cleared to return to Malta last week. Jalal Husni Bey, the Libyan businessman who has made the claims, sent letters to several high ranking government officials in Libya on March 28^th, 2012. It the letters, he claims that the ship, Azzurra, was being used to smuggle goods in and out of the country of Libya.

The Maltese shipping agent, who has asked the media not to identify him, states that all of the cargo on the ship has been documented and during inspection nothing of interest was found. That inspection took place almost 2 weeks ago, yet the ship has still not been cleared to return to Malta. Because of this, the Maltese government has become involved in the situation. Jalal Husni Bey continues to state that these ships from Malta are carrying goods, like food, that is not fit for human consumption and cars that are driving around Tripoli, distributing unregistered Maltese goods to Libyan people. It is thought that Mr. Bey is only making these allegations because he doesn’t like competition.

A service charter is currently being prepared by the Malta Employers Association that would encourage ethical practices when it comes to employment in the security, cleaning and care workers’ sectors of the economy. Companies who operate in these sectors will be asked by the Malta Employers Association to voluntarily sign the service charter. This would allow them to commit their businesses to bring their strategies and operations in line with the practices laid out in the service charter. This behaviour would respect the legal obligations that the country has in place and would also allow employers to operate in ethical ways.

The Malta Employers Association believes that this service charter will be able to show the Maltese government the difference between those companies who are operating at ethical levels and those who are not. Responsible employers will sign the service charter willingly, but those who advertise excellent working conditions but don’t actually have them will hesitate to sign. All companies who sign the service charter would be required to go through inspections to ensure they are holding up the values of the charter and to make sure that they are staying within the laws.

The association is asking the Maltese government to support the petition by assigning a preferential weighting to the charter. This would allow companies who sign up to receive benefits from the Maltese government as well as be a part of this exclusive group. It is hoped that these initiatives would encourage companies to sign the charter. For the companies who do not offer good working conditions and are not working within legal regulations, it is hoped that they will literally clean up their acts and bring their companies in line with the law.

Though none of this is yet set in stone, the framework is being built right now.

According to FinanceMalta, the partnership that has been set up to promote Malta’s financial sector, Malta is well on its way to becoming a secure location in Europe for financial entities like fund managers, to make flexible arrangements for their operations. Malta joins the likes of Luxemburg, Geneva, Zug and Dublin who already carry this promising distinction.

Malta is currently showing growth in five separate areas of the financial sector. They are insurance, trust funds, banking, wealth management and investments. Each of these parts of the financial sector has shown solid growth throughout 2011 and is forecasted to continue this growth in 2012. FinanceMalta has been paramount in bringing the sector into this position and is currently in line with the Maltese government’s vision of where the industry should be.

FinanceMalta claims that the country is definitely establishing itself as a dynamic, effective and English speaking location in Europe that is in a great position to make an impact on the world’s financial sector. In the recent Global Financial Centres Index (GFCI) survey, the cities that are showing weak financial growth are continuing to slide downwards. Some of these include Athens, Milan, Madrid and Lisbon. Other cities that are showing financial potential, like those mentioned above, are slowly but surely showing growth.

Some of the things that go into the GFCI survey include transportation costs, office infrastructure and the opinions of financial professionals throughout the EU. There are also more volatile factors that are taken into consideration like the rise and fall of the Euro and the continuing effect of the European debt crisis.

FinanceMalta announced that the GFCI survey has listed Malta as one of the top 10 off shore centres for finance which opens up Malta for more competition in the EU. This could bring positive changes to the financial sector of the economy.

Unemployment in the Eurozone has hit a record high in March according to the latest reports. Generally it is thought that this is due to spending cuts. When looking at the entire Eurozone, unemployment rose to 10.9% which is the highest since the Euro was introduced in 1999. Compared to March of 2011, when many people believed that the economy was at its worst, it was 9.9%. Looking at the 27 EU members, unemployment in March 2012 was not much better sitting at 10.2%. In March of 2011, the EU27 had an unemployment rate of 9.4%.

Malta is sitting as the sixth lowest when it comes to the Eurozone and for March, 2012, registered an unemployment rate of 6.8%. The lowest unemployment rate for March came from Austria where unemployment is at a very normal 4.0%. Other countries that are registering low unemployment numbers include the Netherlands at 5.0%, Luxembourg at 5.2% and Germany at 5.6%. The highest unemployment rate in Europe is Spain with a stunning 24.1% unemployment. Greece is not far behind at 21.7%.

When comparing numbers to 2011, eight members of the EU had unemployment rates that fell, which is promising, however 19 members of the EU had unemployment rates that rose. The largest increases from March, 2011 to March 2012 were Greece with an increase of 4.2%, Spain with an increase of 3.3% and Cyprus with an increase of 3.1%. Even countries that traditionally do well in the EU, like Italy, are seeing the highest unemployment rates in years. Italy has an unemployment rate of 9.8%, the highest since 1999. Italy, along with Spain, has already announced that they are back in a recession, known as a “double dip” to many economists.

Malta is still holding on to a relatively good economy and unemployment rate, but as noted by other countries in the area, this could quickly disappear.