Higher wages in Malta must be sustained by gains in productivity
MaltaIndependent 09/04/2014: The improving competitiveness of
stressed economies may pose a challenge for the Maltese economy, the
governor of the Central Bank of Malta says in the bank’s annual report
The report reviews the bank’s
policies and operations during the year and includes detailed financial
statements. It starts with a statement by the governor, which is then
followed by an analysis of economic and financial developments in Malta
and abroad. The report also carries a box on the bank’s estimate of
household disposable income.
In his statement governor Josef
Bonnici notes that even though inflation in the euro area stands below
the European Central Bank’s objective of less than but close to two per
cent, there is no sign of deflation. Recent price changes have been
positive in all but three countries, meaning that price falls are not
widespread. Moreover, price declines were only registered in a small
proportion of the components of the HICP basket. Furthermore, there are
no signs that low inflation is self-fulfilling, as long-term inflation
expectations remain well anchored.
In order to address economic
imbalances and to implement structural reforms, various euro area
countries have seen lower nominal wages. Unit labour costs in these
countries have decelerated and have now moved closer to those...read on.