David Darmanin
As the local business community anxiously awaits tomorrow’s budget speech, the effects of the ongoing economic hardships are affecting everyone.
Chemimart Group Chairman Reginald Fava says even the pharmaceutical industry, perceived to be somehow safe, is in dire straits.
“We have been adversely affected just like anyone else. Our sales have gone down, mostly in luxury goods such as fragrances and cosmetics, but also in medicines,” he said.
Commenting on government’s plans to reach a surplus by the year 2010, Fava said: “I don’t think this target is achievable. Targets are generally adjusted according to new circumstances you come across while you try to reach them. Today’s circumstances are clearly different. I think the government will be wise enough to realise that it cannot carry on squeezing until we drop dead.”
M.Demajo Group of Companies CEO Pierluca Demajo said that his conglomerate’s IT and Communications arm is not faring too bad so far, especially when considering the current circumstances.
“I can’t really complain about our performance so far,” he admitted. “We have either been lucky or must have done well. Obviously, with the world going into recession, we are expecting a downturn of sorts.”
Expecting a nightmarish Christmas period is the local jewellery industry. Sterling Group Chairman Alfred Fenech said that the industry is already starting to feel the crunch as consumer confidence slowly deteriorates.
“The situation at the moment goes beyond liquidity and disposable income – it has to do with consumer confidence going down because of forthcoming bills, job losses, investments gone bad, and banks announcing low profits,” he said. “This is affecting us all badly. It wouldn’t be as bad if government decides to introduce new measures by which the man in the street will have more cash to spend.”
If pharmacies get to sell less of such a necessary product as medicines, then it would be right to assume that luxuries tend to feel the impact even more. Fenech confirms this.
“Being a luxury, jewellery will be impacted. This is inevitable. However, so far, it hasn’t affected us as badly as we thought. Sales are actually quite close to what we had last year so far. What worries me is the future. We are anticipating that this will be the worst Christmas ever for the jewellery industry, but we are still going ahead with our normal plans, irrespective of the situation. I now have an exhibition lined up. There will be no cost-cutting yet.”
It so seems that the jewellery industry will not only take a blow because of a downturn in consumption, but also on the vagaries of the price of oil.
“The price of gold is tied to both dollar and oil,” Fenech explained. “Traditionally, when the price of oil goes down, the value of the dollar goes up to devalue gold. But in the current circumstances, this pattern has gone haywire and lately we are seeing an increase in both the value of the dollar as well as the price of gold.”
Developer Sandro Chetcuti admitted that the current situation in the building industry presents challenges in the short term.
However, he remains confident that “in the long term, prospects remain positive especially when one considers that other aspects of the economy are in a much worse shape.”
Due to the sudden increase in utility tariffs, costs are expected to soar in the construction industry also,
“The price of oil influences not only the cost of some of the raw materials but also the cost of services rendered in the construction industry. Hence any changes in water and electricity tariffs will possibly have to be reflected in the cost of new developments insofar as the current market situation allows,” Chetcuti said.

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