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Government monitoring developments following
US attacks
by David Kelleher
The government is constantly monitoring economic developments
that might affect Malta following the 11 September terrorist
attacks on New York and Washington in the US.
Contacted by The Malta Business Weekly yesterday, Finance Minister
John Dalli said the government was monitoring the situation
and any developments abroad that might affect Malta.
Asked whether he expected a slowdown in the economy following
recent events, Mr Dalli said that past experience has shown
that there should not be talk of a major slowdown.
“We are looking closely at what is happening. We are monitoring
the tourism sector and the price of oil, however there are no
indications that we should take drastic action,” Mr Dalli
said.
“The most we can do at the present time is wait for developments
and not pre-empt any issue,” he added.
With regards to government help for those sectors affected directly
by the attacks on the US, Mr Dalli said that although the tourism
sector in Malta suffered, there are also indications that Malta
stands to
benefit.
“There are two sides to the problem. It is true that the
sector has lost conference business and had numerous cancellations
but on the other hand, business seems to be coming to Malta
as they consider the island to be much safer than other destinations.
In the past, tourism has generally gained,” he added.
Asked whether the attacks could have an effect on consumer spending,
Mr Dalli said it was important not to assume facts when not
proven. “These types of shocks generate shifts in consumer
spending. The question that must be asked at this point in time
is ‘how long is it (this situation) going to last?’
and what the effects will really be,” he said.
“I believe that there will not be any long-term effects
and we will return to normal quite fast. Then again, one must
not forget that the present effects being felt are real,”
Mr Dalli said.
The US government has pumped billions in the economy and European
central banks are expected to introduce further interest rate
cuts to prevent a recession in Europe.
When contacted yesterday, a spokesman for the Central Bank told
The Malta Business Weekly that the bank’s monetary council
will be meeting today for its usual monthly meeting. Asked whether
the bank would announce further rate cuts, the spokesman said
such decisions, if any, would be taken during the meeting.
The massive toll on the insurance industry following the US
attacks is expected to be reflected in insurance premia across
the world. Speaking to The Malta Business Weekly, the chairman
of Middlesea Insurance, Mario C. Grech said the industry was
already facing hard times before the attacks, and it was expected
that the local industry would also be affected.
“Insurers and re-insurers abroad will have to factor the
cost of what happened. This will undoubtedly affect the industry
worldwide, including Malta.”
Middlesea Insurance was not directly affec-ted by events in
the US because according to the group’s annual report,
Middlesea stopped writing reinsurance business from 1 November
2000. Furthermore, Middlesea Insurance’s international
reinsurance account was made up of a short-tail property business
worldwide excluding the US and Canada.
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