How policy makes a difference

While retail sales continue to fall across Europe, in Malta trade continues to strengthen.

Official statistics continue to confirm that the economic performance in Malta remains much better than that of the rest of Europe. For yet another month, while retail sales continued to decline across the continent, in Malta there was more activity.

According to Eurostat, in February store sales in Europe were on average 0.7% lower than a year earlier. The biggest decrease was observed when it comes to sale of food items, where turnover fell by 1.4%, but even on fuel there was a decrease of 1.1%. Even though these are essential items, consumers are not able to buy the same amount they could afford to buy a year earlier.

In contrast, retail sales in Malta continued to pick up, rising 2.5% more than in the same month a year earlier. The trend in retail sales in Malta has now been better than that in the euro zone since January 2022. While in Malta sales are increasing, in countries such as Belgium there has been a decrease of almost 7%, while in Germany sales have fallen by around 3%. In Slovenia shops had almost 6% lower activity, while in Austria there was a 2% drop.

The squeeze in household spending is due to the heavy burdens people are facing across Europe. This is due to three causes. First of all, there is the effect of high fuel and energy prices. Then, those individuals with loans are seeing a phenomenal burden as a result of the interest rate hikes that have been imposed by European banks. Finally, many governments are embarking on fiscal austerity programmes because they want to recoup the money they spent sustaining companies during the pandemic.

These factors are not present in Malta because full support continues being given by the Government on fuel and energy prices, while banks are doing well and have therefore not raised interest rates on loans. Furthermore, as a result of the Government’s intervention on food prices, inflation is starting to fall and this is sustaining families considerably.

Photo: Roman Pohorecki

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