Wall Street crash may have ‘frightening’ effect on Shiypards privatisation

Charlot Zahra
Economists and bankers quizzed by sister paper Business Today disagreed about the extent of the impact on the Maltese economy of the crisis that has hit Wall Street in the past week, leading to the bankruptcy of Lehman Brothers and Merril Lynch on Monday week, as well as the rescue of various US financial institutions, including AIG.
Former Labour Finance Minister and economist Lino Spiteri said that the crisis that hit the US banking system could leave a negative impact on Malta’s exports.
“If as a result of the financial crisis there is further pressure on an already weak global economy, Maltese exports will be affected through the slowdown,” Spiteri told Business Today.
Questioned as to what lessons for the Maltese economy one should learn from the crisis that has hit Wall Street, Spiteri said: “The authorities have to regulate with focus and efficiency, which is something they already do.”
Spiteri said he believed that there were local investors who were indeed hit by the melt-down of the US financial system. “No doubt there are investors who have placed funds in foreign financial assets. They are obviously being hit by the decline in the market value of such assets,” the former Labour Finance Minister said.
On his part, veteran economist Karm Farrugia told Business Today that it was inevitable that the Maltese economy would be impacted in some way or another by the crisis in the US financial markets.
“No economy is totally immune to the Wall Street crisis: not even the Russian one,” he insisted.
However, Farrugia said that the Maltese economy “will chiefly be hit only indirectly” by the crisis in the US financial markets.
He explained how the crisis will “plunge the world into a recession, hitting hard other economies with which we trade in goods, but especially in services, mainly tourism.
Farrugia added that “although BoV has already hinted that it could be a ‘modest’ casualty, I don’t believe this is serious.
“More frightening, perhaps, is the psychological impact the crisis will have on potential bidders for the Shipyards which depend a lot on bank credit,” the veteran economist warned.
You can read the full story in today’s edition of Business Today.

czahra@mediatoday.com.mt

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