The Maltese economy’s capacity to weather the financial maelstrom that has overshadowed the global economy since 2008 was underscored at an HSBC Malta business breakfast, where the bank’s head of global banking and markets, Chris Bond, said that ‘resilient’ was the perfect word to describe Malta’s performance during those tumultuous times.
Economy Minister Chris Cardona, meanwhile, observed how Malta, unlike some of its EU peers, had not required central bank intervention during the crisis, adding that Malta’s economic diversification had sufficiently protected Malta from the economic shocks that small, open economies are so susceptible to.
They made their observations yesterday morning at a business breakfast organised by HSBC Malta at the Hilton in St Julian’s, which discussed the central banking revolution and its impact on the world economy.
Dr Cardona observed that European Central Bank rates were reduced to record lows, and pointed out that central banks had developed non-standard measures to restore confidence but had still failed to revive their economies.
Dr Cardona however said that Malta’s economy had proved resilient during the crisis, while edging up modestly when compared to the performance of a number of other countries.
He said that Malta’s labour force continued to grow, evident from the rate of female participation, but stressed that the rate still remains relatively low.
Dr Cardona said that it is vital that Malta continues to develop and position itself as a maritime hub.
He said that Malta enjoys a robust banking sector and our traditional banking model remained the backbone of the country's banks.
HSBC Bank Malta CEO Mark Watkinson said that yesterday’s event was vital in terms of getting a closer look at the performance of global economies, as well as the Maltese market.
The bank’s head of global banking and markets, Chris Bond, gave an insight into headlines related to Malta’s banking sector.
He said that “resilient” was the perfect word to describe the performance of Malta’s economy during the global financial crisis.
“Resilience comes about due to a robust banking sector; Malta’s economy performed very well,” he said, quoting the recent IMF statement on Malta, which had forecast that Malta will continue to outpace its eurozone partners in terms of economic growth.
He said that there are three categories of banks in Malta: those that have an immediate impact on the economy; non-core domestic banks; and 14 international banks, which represent five times the size of Malta’s GDP but which have no impact whatsoever on the domestic economy here.
HSBC’s global economist, Madhur Jha, whose major task is to monitor the changing dynamics inside developed and emerging market economies and their impact on financial markets, said it is quite refreshing to be in a country which escaped the global financial crisis unscathed, referring to Malta.
She also suggested that a case study be carried out to ascertain whether Malta was sufficiently protected from the effects of the current financial contagion.
“The crisis has led to a massive global economic transformation; we at HSBC believe that the world has entered a weak economic trend,” she said.
“This year we are expecting a repeat of the same story that occurred during the last few years; strong growth that gradually turns softer.
“The US, compared to its peers, is doing well but when compared to its historical performance, it wasn’t doing that good,” she said.
“There’s some type of structural problem,” she said, while pointing out that it all boils down to the global unemployment rate which is far too high.
“The last time the world witnessed such high unemployment was during the Great Depression,” Ms Jha lamented.
She said that central banks were now targeting inflation due to pressure to achieve multiple objectives, same as in the 1960s and 1970s.
“At the time, it was believed that increasing inflation would result in an increase in employment.
“However not all is doom and gloom, and the emerging market outlook is slightly positive with debt levels slightly decreasing,” Ms Jha said.
She highlighted that the global economy will pick up but led by emerging markets, like China.
“This is not something that will happen in 2015 but the idea is that it is already happening; expect 2.5 billion people to become richer and this will lead to a demand in goods and services.
“China, Brazil, India and Mexico are the main emerging markets; China is delivering during every decade the same growth pace,” Ms Jha said.