GozoNews.Com

The General Retailers and Traders Union leaders today gave details in a Press Conference to support GRTU’s argument that Gross Domestic Product for the third quarter 2007 should not read 4.14% growth but 1.94%. GRTU insists that the scenario based on its calculations as supported by University Professor of Economics, Joseph Falzon prove what GRTU members are saying. GRTU’s survey amongst members indicate that the Economic Growth indicated by the Public Statistics is not realistic.

In his explanation during the Press Conference Vince Farrugia Director General, GRTU explained that the cause of the problem is the calculation of Final Household Consumption. GRTU insists that the recognised deflator of consumption spending is the Retail Price Index. According to GRTU, Household Consumption in the third quarter of 2007 in real terms should have gone up by 3.64% and not by 6.96% if the Retail Price Index is used as a defaltor for Household Final Consumption Expenditure.

The GRTU is insisting that the third quarter 2007 has adjusted real Consumption at constant prices upwards using a negative deflator of -1.86%. NSO, insisted Vince Farrugia, has not explained how Consumption in real terms has been declared higher than consumption in nominal terms, when everybody living in Malta knows that inflation during the third quarter of 2007 was not negative. The true picture as analysed for GRTU by Profs. Falzon shows that consumption in real terms, if the Retail Price Index is used as a deflator, went up by only 3.64% and not the 6.96% as stated by NSO. Since final Household Consumption represents 86% of GDP, the GDP Growth for the third quarter 2007 should have been 1.94% and not 4.14% as stated by NSO.

GRTU considers this to be a very serious situation. A GDP growth of 4.14% is satisfactory and does not instigate Government to take additional measures to push the economy forward, while a growth of 1.94% is insufficient and necessitates Government to take action that will be felt in people’s pockets. Action by Government could result in difficulties given the current rate of inflation of 3.49% and more as will be shown by the December RPI Results.

“Government must clarify the situation. Malta cannot continue to have a situation where the Chief Officer of NSO is also the independent regulator responsible to the public to ensure that NSO functions correctly. If methodology is changing, or if unusual circumstamces prevail, NSO should clearly explain the situation without the need of GRTU or any other body to raise the alarm. The measurement of GDP Growth is important for the whole economy and the measurement of Household consumption is of interest particularly to a National Organisation representing Retailers and Traders like GRTU. GDP figures are important economic indicators defining Government economic action. These figures cannot continue to be doubtful”, insisted Vince Farrugia.