How Malta and Fiji got impacted?

I have been trying to post experiences of individual countries in this global crisis – Iceland, Hungary, Ukraine ,India, China, Taiwan and Korea. I came across 2 speeches which explain the situation of 2 island economies – Malta and Fiji.

Let us first see Malta’s case:

First, Malta has a small open economy, highly dependent on trade. As the recession grips our major markets, Maltese exporters will be increasingly affected. Indeed, firms in the automotive sector have already been hit, while the bleak outlook for the UK economy in particular is likely to have a negative impact on tourism. As the export sector comes under pressure, this will have an adverse effect on domestic demand. Accordingly, the Bank’s growth projections for 2009 have been revised downwards to under 2%. This, in turn, could have repercussions for the banking system as asset quality deteriorates.

Second, partly because of the small size of the economy, bank loan portfolios are highly concentrated. More specifically, domestic banks are exposed to the construction, mortgage, and property development sectors directly to the extent of over 50% of total loans, and in the  form of collateral securing other lending.

And now Fiji:

Fiji’s commodity exports will be affected insofar as external demand falls. Hence, demand-driven exports, such as tourism, water and garments are likely to slow down. Supply-driven exports, while unaffected from the global crisis, are bound by on-going structural constraints. Overall, there is likely to be a slowdown in the growth of total exports.

Personal remittances are likely to decline further.

Overall, imports are expected to rise. The weakening of the Fiji dollar, coupled with higher duty, is likely to raise the price of cement and cars out of Japan, dampening demand. On the other hand, the strengthening of the Fiji dollar against the Aussie and Kiwi dollars will lower food prices received from Australia and New Zealand. However, demand may be inelastic.

The trade balance may worsen.

Negative impact on Tourism revenues is the common problem in both.

One Response to “How Malta and Fiji got impacted?”

  1. anon Says:

    Hope you factored in the Baltic Dry Index(BDI) because it shows a massive 20+% decline. You know what that means..?

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