Malta’s resiliency, savings helped weather storm – Chris Bond HSBC
Malta has weathered the international economic storm through its resiliency and savings culture but also due to its diversification into ICT, Health and Financial Services according to HSBC Bank Malta Head of Global Banking and Market, Chris D A Bond.
“Before 2008 Malta enjoyed the upward boom as the rest of the world, but in times of crisis Malta's resiliency and resourcefulness ensured that the local economy weathered the storm,” Mr Bond added while addressing the Malta’s business community.
“It is the propensity of the Maltese to save that has enabled the country to weather the financial storm and, besides, they do not overstretch themselves on loans. Individuals pour their cash in banks meaning that financial institutions have liquidity.”
“Malta's economy has performed certainly better than most of the Eurozone when considering that Malta's GDP growth over the last 10 years has outperformed the eurozone since the crisis started. Government deficit has outperformed the eurozone average since 2008. Malta's GDP is now at 2.4% and falling. Malta's average debt in relation to GDP has been 68%. Unemployment is 6.4% when compared to eurozone which averages at 11%.”
“The strength of the banking system has always used traditional asset/equity ratio banking models which allowed local banks to lend and still support the economy. Credit growth continued unabated between 2008 and 2011, thus throughout the banking crisis. Maltese banks have a plentiful supply of deposits while banks lend around 80% when compared to 110% lending adopted by the majority of institutions abroad.”
According to the EC Autumn forecast, the future shows that Malta will continue to outperform eurozone economies. Malta's economy is forecast to grow 1.6% during 2013 when compared to 0.6%. The challenge faced by this country is that the eurozone itself is not expected to register significant growth over the next two years.
“The second challenge is the concentration risk in the banking sector which has been listed at 800% although I believe it is closer to 300%.”
“The third challenge is the labour force and its ability to adapt to the changing scenarios.”