Editorial

Malta's economic growth rate last year was even better than that originally forecast, but at 2.9 per cent, the rise is still the lowest recorded by the 10 countries that joined the European Union in 2004.

Now, considering the downturn in 2003, there has been a steady improvement since then, as the EU Commission itself has noted. But taken in the context of the performance registered by the 2004 entrants over the three-year period, it would seem that the island could have done better in its work to exploit the new advantages arising out of membership.

Cyprus, the country with which Malta often likes to compare itself, reports a rise of 3.8 per cent in economic growth, representing a slight drop over that for 2005. But Latvia's jumped from 8.6 per cent to 11 per cent. One recent report on the European economy published in Munich finds the growth performance of the three Baltic countries as particularly remarkable, with annual growth rates in the seven to 11 per cent range in 2004 to 2006. The best performers, Estonia and Latvia, are assessed to have good business environments among the transition economies.

In the context of the island's level of development, it may be harder to notch up the kind of growth rates registered by some of the new members. Even so, it is widely acknowledged that the country can tap even further its growth potential if only it manages to speed up its reform programme.

Considering the inbuilt inflexibility inherent in the Maltese economy, the progress made over the past few years is most significant, but if the country wants to see a sharper rise in the people's living standard, Malta would need to step up its drive to remove obstacles in the way to a higher economic growth.

Taking just one example of how painfully slow the country can be in bringing about the reforms necessary to move ahead in the reform programme, there appears to be no breakthrough in sight yet in the talks over the much talked about reform at the ports. Tough talk is resorted to in handling difficult situations in some other sectors, but when it comes to improve operations at the port, the wheels grind slowly.

How can the country speed up its economic growth rate if it takes ever so long in removing outdated practices that are adding up costs to trade? The country needs to become more competitive.

There are instances when it is not just resistance to change that affects competitiveness, but also lack of foresight on the part of those running the businesses, or of those who own them. For example, the country knows only too well how difficult it has been to bring about reforms at Malta Shipyards. But it was learned recently that there are other factors that hit at the core of their efforts to speed up recovery - lack of sufficient capital investment in the works.

So, inefficiencies may not be due only to resistance to change on the part of the workers, but, also, to other factors, such as outdated plant, or lack of expertise on the part of the management, a matter that is sometimes overlooked. Firms whose management were unable to forecast, in time, the effects of EU membership on their operations, and to take remedial action, are today paying the price for their own inefficiency.

Removing obstacles to growth has to be pushed to the top of the national agenda.