Alternattiva Demokratika asks whether Government “is aware of the low-inflation phenomenon which is hindering EU’s economic growth and what are its plans to counteract it?”

Eurostat’s figures show that four EU members are already experiencing deflation: Greece, Bulgaria, Cyprus and Ireland, AD said.

AD Chairperson, Prof. Arnold Cassola, said, “inflation in Malta fell drastically from 1.8% in March 2013 to a record low 0.5% in November 2013. This phenomenon is also experienced in the EU with a reported average inflation of 0.7%. Malta imports and exports fell by 17% and 20% respectively during the first eight months of 2013 compared with the same period in 2012.

“This clearly shows the drastic decline in domestic and foreign consumption and can create havoc with public and private efforts to repay debts and risks bringing reasonable consumer demand to a halt. Uncontrolled consumption of goods is bad, but consumption of cultural services, online services etc. is beneficial and needs to be encouraged.”

He added, “the decrease in overall consumption is having an effect on manufacturing companies: Four manufacturing companies in Malta are considering lay-offs or offering reduced hours due to lack in demand.”

Prof. Cassola concluded, “AD urges the Government to disclose its plans of how it intends to counteract the effects of low-inflation, considering that Budget 2014 is forecasting a drastic increase in total Income Tax, Value-Added Tax, Licenses and is lacking in plans of how to attract new decently-paid jobs. This is highly contradictory and the Government must face reality and be honest with the nation.”

Permalink: AD on Budget 2014 projections & record low 4-year inflation in Europe