Issue link: https://maltatoday.uberflip.com/i/1244433
07.05.2020 4 NEWS FROM PAGE 1 e lockdown and closure of non-essen- tial businesses since 26 March is weighing on private consumption and service ex- ports, with limited room for expenditure on recreation or food services. However, the initial tightness in the labour market and households' high saving rate may cushion the crisis' impact on consump- tion, the report said. e external sector is set to contribute negatively this year, reflecting a weaker external environment, elevated global uncertainty and a substantial decline in tourism revenues. A fall in domestic de- mand is expected to drag imports down at a slower pace than exports in 2020, be- fore imports growth outpaces exports' in 2021. e current account surplus, which peaked in 2017, is projected to gradually narrow over the forecast horizon, but to remain high. An easing in general restric- tions is expected to re-stimulate domestic demand in 2021, though it is set to remain below its 2019 level. As a small open economy, Malta's eco- nomic outlook is highly sensitive to global uncertainties and the growth per- formance of its trading partners. eir economic development in the wake of the COVID-19 pandemic may weigh on Mal- ta's exports and pace of recovery more strongly than assumed in this forecast. e fast pace of economic growth in Malta led to a record-low unemployment rate of 3.5% in 2019, but in the wake of the COVID-19 crisis, the temporary closure of tourism-related activities is set to have a harsh impact on employment. e EU forecast says that, despite the financial aid made available to employees and the government's measures to cush- ion the impact on corporates, the unem- ployment rate is projected to increase to around 6% in 2020 before decreasing again in 2021 to 4½ %. e interruption of hospitality-related activities will substantially impact ser- vices inflation as a result of demand con- traction and wage reductions. In turn, possible disruptions in supply-chains may create inflationary pressures for some im- ported goods. In 2020, the general government balance is projected to swing into a large deficit of around 6¾% of GDP. Revenue from indi- rect taxes is set to decline as household consumption falls. Direct tax revenues are projected to record a slight positive growth given the assumed wage growth and profits recorded by companies in the previous year. e main drag on the fiscal balance will come from the financial packages adopted to combat the economic impact of COV- ID-19. Wage supplements, additional spending on healthcare and social bene- fits, and interest rate subsidies are expect- ed to cost around 4% of GDP. Moreover, the social measures announced in the 2020 budget, which was prepared under a more favourable economic scenario, are expected to be implemented. Assuming no changes in policies, which implies that the pandemic-related meas- ures would be discontinued after a few months and healthcare spending would decline to pre-2020 levels, the gener- al government balance should improve strongly, but remain in a deficit of around 2½% of GDP. After declining steadily since 2011, the government debt-to-GDP ratio is forecast to surge to about 51% in 2020 and remain around this level in 2021, driven by ad- verse developments in the deficit. EU-wide trends e shock to the EU economy is sym- metric in that the pandemic has hit all Member States, but both the drop in output in 2020 (from -4¼% in Poland to -9¾% in Greece) and the strength of the rebound in 2021 are set to differ markedly. Each Member State's economic recov- ery will depend not only on the evolution of the pandemic in that country, but also on the structure of their economies and their capacity to respond with stabilising policies. Given the interdependence of EU economies, the dynamics of the re- covery in each Member State will also af- fect the strength of the recovery of other Member States. e pandemic has severely affected consumer spending, industrial output, in- vestment, trade, capital flows and supply chains. e expected progressive easing of containment measures should set the stage for a recovery. However, the EU economy is not expected to have fully made up for this year's losses by the end of 2021. Investment will remain subdued and the labour market will not have com- pletely recovered. e continued effectiveness of EU and national policy measures to respond to the crisis will be crucial to limit the eco- nomic damage and facilitate a swift, ro- bust recovery to set the economies on the path of sustainable and inclusive growth. Private consumption and trade projected to take a significant hit EU Commision economic and financial Spring forecast MICROSOFT Greece, Cyprus and Malta has announced organisa- tional changes in its senior man- agement team, aiming at further strategic development of its partner network and more effective cus- tomer support, at a very critical and exceptionally demanding period for businesses in all three countries. Specifically, Albertos Bour- las, integrates Microsoft's sen- ior management team, taking on duties of Commercial & Partners Sales Director while Ioanna An- dronopoulou takes over the posi- tion of Sales Director, Enterprise & Public Sector. Albertos Bourlas' previous po- sition was at Vodafone, where he has worked for the last 11 years in various management positions, more recently as General Man- ager for Vodafone's Retail Stores Chain. He has many years of ex- perience in the field of Sales and Marketing in the field of technol- ogy in London, New York, and Hong Kong. He graduated from the Department of Business Ad- ministration at Georgetown Uni- versity, and holds an MBA spe- cializing in the development of new commercial activities from the Massachusetts Institute of Technology (MIT). Ioanna Andronopoulou has a successful career at Microsoft, which she joined in 2014. She is taking on her new role following her successful career as Direc- tor of Financial Services and In- surance Accounts for Microsoft Greece and Cyprus. She carries broad experience in the field of sales and has previously worked in France and Sweden. She is an Electrical Engineer, graduated from the University of Patras and holds an executive MBA from the Athens University of Economics and Business. With these two additions to its senior management team, Micro- soft Greece, Cyprus and Malta is expected to contribute even more effectively to the digital transfor- mation of businesses in the three countries, promoting innovation, entrepreneurship, synergies while meeting modern needs for flexi- bility, speed, security, reliability across industries and public sec- tor. Microsoft reinforces its Greece, Cyprus, and Malta senior management team The interruption of hospitality-related activities will substantially impact services inflation