In the past year, 60% of Gozitan enterprises invested in their business – Gozo Business Sentiment survey

During the past 12 months, almost 60 per cent of enterprises in Gozo invested in their business. Additionally, more than half of these businesses plan to invest over the next six months.

This was particularly noted in wholesale and retail trade, construction, arts and entertainment and accommodation, and food services sectors.

These findings resulted from a collaborative survey, titled the Gozo Business Sentiment, between the Gozo Business Chamber and the Gozo Regional Development Authority.

This exercise gathered real-time information on recent performance, business activity expectations, investment and employment trends and pricing dynamics.

The survey was conducted in September 2023 and March 2024 with a sampling size of 80 firms.

Participation was proportionally distributed to reflect Gozo’s business demographic. Overall, 25 per cent of enterprises had workforces ranging from 10 to 50 individuals while 15 per cent employed 50 and over.

It was conducted by engaging high-level representatives through a telephone call, mostly taking the form of discussions rather than a rigid survey. Furthermore, the survey was intentionally designed to be straightforward and concise to encourage participation..

Business performance in Gozo and present concerns

The biggest concern for Gozitan businesses remained employee shortages. These issues were strongly reported in both sampling periods, with more than half of the businesses expressing their concerns.

Cost pressures were equally a worry for businesses as the majority outlined that they were facing the rippling effects of a pandemic and international price inflation caused by the war in Ukraine.

On a positive note, in March 2024, fewer businesses identified cost pressures as a primary concern, compared to six months prior.

Meanwhile, a number of businesses remarked that a slowdown in sales was a major concern for them.

Despite 33 per cent of businesses reporting such problems in 2023, the number decreased almost by half within six months. This means that, in comparison, only 16 per cent of Gozitan businesses reported a slowdown of sales up until March 2024.

On the other hand, 30 per cent of respondents made reference to other concerns, which varied across two data collection points and also the sectors that they operate in.

Some prevailing concerns included lack of parking availability in Victoria, increased regulatory and compliance procedures, and unsustainable development.

Overall, weather disruptions induced by climate change, along with extreme weather events, present several risks to businesses. This includes, operational disruptions, increased costs, regulatory pressures, and shifts in consumer preferences.

The latest European Investment Bank (EIB) survey shows that 64 per cent of EU-based firms have incurred losses due to climate change.

Despite this, the September 2023 survey highlights that only 45 per cent of Gozitan businesses acknowledge the potential impacts of climate change on their operations.

The survey further indicates that only half of these firms are taking measures to enhance climate resilience.

“This suggests that, in comparison to their EU counterparts, businesses in Gozo demonstrate lower awareness of the risks posed by climate change to their operations, despite studies suggesting that islands are particularly vulnerable to changes in weather patterns,” the survey noted.

53 per cent of businesses anticipate unchanged business conditions

Overall, during the sampling periods, 60 per cent of businesses expressed that business conditions remained the same, while 25 per cent of enterprises noted improvement. On the other hand, 18 per cent highlighted deteriorated business conditions between September and March.

Looking ahead to the next six months, 53 per cent of businesses anticipated unchanged business conditions.

Meanwhile, 38 per cent of businesses expect improved business performance in the upcoming months. Overall, this equates to a notable five percentage point improvement over the expectations noted in September 2023.

Such expectations were mostly reported in the tourism related sectors – a natural assumption considering the highly busy summer months – and manufacturing.

Only 10 per cent of businesses expect worsened conditions in the upcoming months, down by 10 percentage points from the previous period.

Impactful budgetary measures

Among the various budgetary measures presented last October, during the March 2024 survey it was noted that while 20 per cent expect a positive overall impact fom the measures, 17 per cent foresee a negative effect.

Consequently, the overall net impact is positive, standing at three per cent.

The rest, (63 per cent) responded that they have yet to determine how the measures outlined in the 2024 budget will affect them.

During the final exercise of the survey, respondents were asked to propose measured for the 2025 budget.

Among the issues highlighted, respondents noted the following as the most significant to be addressed.

• Initiatives targeting better connectivity between the two islands.

• Increased support to cover transport costs for Gozitan-based businesses.

• Introduce a more equitable framework for those operating in the real estate sector to ensure further transparency.

• Further assistance for the self-employed who invest in their businesses.

• Introduce a measure to entice tourists for longer overnight stays.

• Introduce a system of VAT where VAT is paid against receipts and not against invoices.

• Provide co-working spaces at the Digital Innovation Hub in Xewkija.