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3 NEWS 2.3.2023 DURING 2022, Gross Value Added (GVA) rose by 13.7 per cent in nominal terms and 8.1 per cent in volume terms, when compared to 2021. The production approach e drivers behind this 8.1 per cent growth were Service activities (NACE Sections G to U), Industry (NACE Sec- tions B to E) and Agriculture and fishing (NACE Section A), with a contribution of 7.7 percentage points, 0.7 percentage points and 0.1 percentage points, respec- tively. Conversely, Construction (NACE Section F) had a negative contribution of 0.3 percentage points. Compared to last year, Service activities increased by 9.0 per cent, Industry by 7.6 per cent and Agriculture and fishing by 8.5 per cent in volume terms, whereas Construction dropped by 7.0 per cent. e increase in Service activities was mainly driven by the following sectors: Accommodation and food service activ- ities (81.4 per cent), Transportation and storage (23.3 per cent), Administrative and support services activities (15.8 per cent), Information and communication (7.9 per cent), and Wholesale and retail trade; repair of motor vehicles and mo- torcycles (7.7 per cent). Net taxes on products contributed neg- atively towards GDP growth, with a de- crease of 5.9 per cent in volume terms. The expenditure approach e expenditure approach is anoth- er method used to calculate GDP and is derived by adding Final consumption expenditure of Households, General government, and Non-Profit Institutions Serving Households (NPISHs), Gross capital formation and Net exports. e contribution of domestic demand to the year-on-year GDP growth rate in vol- ume terms was of 10.9 percentage points, of which 4.7 were due to Final consump- tion expenditure and 6.1 to Gross capital formation. External demand registered a negative contribution of 4.0 percentage points, with 10.8 percentage points at- tributable to exports and 14.8 percentage points explained by imports. In 2022, Final consumption expend- iture witnessed an increase of 7.6 per cent in volume terms. is was the result of increases in Household expenditure, Government expenditure and NPISHs expenditure by 10.3 per cent, 2.4 per cent and 3.7 per cent, respectively. Gross fixed capital formation rose by 30.4 per cent in volume terms. is in- crease was mainly attributable to invest- ment in Transport equipment. Exports and imports of goods and ser- vices in volume terms rose by 6.4 per cent and 9.7 per cent, respectively. The income approach e third approach to measure econom- ic activity is the income approach, which shows how GDP is distributed among compensation of employees, operating surplus of enterprises and taxes on pro- duction and imports net of subsidies. Compared to 2021, the €1,868.4 million increase in nominal GDP was the result of a €643.9 million increase in Compensa- tion of employees, a €1,172.2 million rise in Gross operating surplus and mixed in- come, and an increase of €52.2 million in Net taxation on production and imports. Gross National Income (GNI) GNI differs from the GDP measure in terms of net compensation receipts, net property income receivable and net tax- es receivable on production and imports from abroad. Considering the effects of income and taxation paid and received by residents to and from the rest of the world, GNI at market prices for 2022 was estimated at €15,561.5 million. 2022 GDP up 6.9%, or €1.9 billion, over previous year FROM PAGE 1 Operators insist that whereas Malta - pre-COVID - provided a very attractive package for the conference and events sector, the rising costs of products and services was now making it impossible for local operators to compete with their counterparts in destinations like Spain, Cyprus, Greece, Portugal and France. But the issue of biggest concern among local MICE (meetings, incentives, con- ferences and events) operators, is the demise of Air Malta and the govern- ment's stated strategy for the national airline. "Our sector depends on airlines who allow group bookings and who are flexi- ble with us when it comes to split book- ings, late bookings and other issues," one operator said. "We can no longer depend on Air Malta, especially as it continues to cut, or lower the frequency of flights to and from key markets like France and Belgium." Sources told BusinessToday that gov- ernment said to be pinning their hope on Wizz Air being able to make up for Air Malta's shortcomings. But, while Wizz Air does provide a solid connec- tion to the Polish market, replacing Air Malta is a long way in the future. Another roadblock on the road to re- covery for conference and events op- erators in Malta are the rising costs of many products and services, particu- larly the prices being quoted by local hotels, themselves trying to recover post-pandemic. "A hotel recently quoted me €480 per night per person for a group of around 80 attendees," one operator said. "Of course I lost that group who chose, in- stead, to go to Spain, where they were quoted €250 per night per person by a hotel of the same standards and calibre." Another operator complained about the rising cost of food and beverages for events, citing prices starting at €75 per person today, up from an average of un- der €50 per person pre-COVID. "A major venue recently quoted me €250 per person for the venue, minimal audio-visual setup and lunch, featuring chicken thigh as the main course," the operator said. "How can I convince my clients Malta offers the best value for money with those prices?" Rising costs have also been registered in transportation, with a regular airport transfer, which in 2019 averaged €180 per coach, now costing €250 each way. Operators have also complained about the constant construction work all over the island, saying this was not only turning away potential customers, but was also turning any confirmed group visits to Malta into a bitter experience, with visitors having to navigate building sites, upturned pavements and heavy vehicles even in centres like Valletta. Positive winter When contacted by BusinessToday, Tony Zahra, president of the Malta Hotels and Restaurants Association, dismissed claims that the industry was floundering and said it was, in fact, re- covering at a faster rate than had been anticipated. "We knew recovery in this sector would be slower, especially because lead times in this business were quite long, often between 12 and 36 months," he said. "But these lead times have been reduced as the world emerged from COVID, and the Maltese sector enjoyed a positive winter." Zahra said that 2023 promises to be equally positive for the sector, and in- sisted Malta would retain its reputation as a favourable and competitive destina- tion. 2 Exports and imports of goods and services in volume terms rose by 6.4 per cent and 9.7 per cent, respectively (Tables 2a and 2b). The income approach The third approach to measure economic activity is the income approach, which shows how GDP is distributed among compensation of employees, operating surplus of enterprises and taxes on production and imports net of subsidies. Compared to 2021, the €1,868.4 million increase in nominal GDP was the result of a €643.9 million increase in Compensation of employees, a €1,172.2 million rise in Gross operating surplus and mixed income, and an increase of €52.2 million in Net taxation on production and imports (Table 3). Gross National Income (GNI) GNI differs from the GDP measure in terms of net compensation receipts, net property income receivable and net taxes receivable on production and imports from abroad. Considering the effects of income and taxation paid and received by residents to and from the rest of the world, GNI at market prices for 2022 was estimated at €15,561.5 million (Table 3). Chart 1. GDP growth rate (year-on-year) -20.0 -15.0 -10.0 -5.0 0.0 5.0 10.0 15.0 20.0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2019 2020 2021 2022 Nominal Volume per cent period GDP growth rate (year-on-year) Rising costs of products and services have operators worried

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