Last Updated on Thursday, 12 October, 2023 at 11:08 am by The Malta Business Weekly
Silvan Mifsud is director of Advisory at EMCS Tax & Advisory and also a council member of The Malta Chamber
As if the world has not been through enough in the past three-and-a-half years, we now have yet again a major conflict in the Middle East. Besides the tragic loss of precious life brought about by every war and conflict, just like the other raving war between Ukraine and Russia, the effect on the world economy of this serious conflict, could be very serious.
Crude oil prices have already surged over concerns that Hamas’ attack on Israel will increase tension across the Middle East and affect output from leading oil producers. Such increase in oil prices are likely to prolong the period of high oil and fuel prices, which in turn would continue fuelling inflation across the globe. While Israel is not an oil producer, there are concerns that the conflict could trigger wider uncertainty in the region and lead to tougher enforcement of sanctions on oil from Iran, who openly backs Hamas’ actions.
Moreover, the US have been tirelessly trying to broker a deal with Saudi Arabia to normalise ties with Israel, in an attempt to convince Saudi Arabia to raise its oil output. This is now in great jeopardy.
All this puts the stress on every country, including Malta, to double its efforts and fight inflation. Attempts to solve the effects of inflation by short-term policies that may sound attractive, but that create more problems than the problems they are trying to address, will push economies towards a difficult path. Ultimately, we are likely going to continue facing a prolonged period of high turbulence and hence no quick fix solution will be effective. This means that any policymaker must ensure that any policies do not jeopardise the future viability of the economy.
Finally, now that the August inbound tourism figures have been published, we can see that for the period January to August, when compared to January to August 2019, tourist arrivals have increased by 7.2%. On the other hand, the average expenditure per night in real terms for the period January to August stood at €114.38, which is marginally better than the average expenditure per night for the period January to August 2019, which stood at €113.82. Having said so, the average real expenditure per tourist for the period January to August stood at €778.23, which is substantially lower than the average expenditure per tourist registered for the period January to August 2019, which stood at €804.73. That means a reduction of 3.3% in the average expenditure per tourist, for the period, when comparing 2023 to 2019.
Last week, the latest utilisation of job skills report for 2022 was published by the NSO. This report outlined that only 34% of employed persons have tertiary education and that 51.5% of the workforce, to a large extent, doing repetitive tasks at their workplace. This was mainly evident in jobs related to clerical support workers, service and sales workers, skilled agricultural, forestry and fishery workers, craft and related trades workers, plant and machine operators and elementary occupations. Moreover the vast majority of the workforce (63.4%) spends no working time reading on job-related documents, likely meaning that they are not getting any training or input to improve their skills.