Editorial

Up to some time ago, government quarters were claiming that, despite the economic turmoil abroad, the economy was still showing signs of growth. Well, latest official figures showing that the economy is in fact in recession has put paid to such talk. In truth, the government had not been under any delusion that the economy would not be hit by the downturn but some government people might have shown a degree of over-optimism with regard to the island's ability to escape a severe blow. Others thought the crunch had yet to come and it looks as if it is now coming, as the difficulties reported by some firms and hoteliers show.

Exports are down and unemployment is up - two key economic indicators that are showing the signs of the times. Economic growth last year was down to l.6 per cent, compared to 3.6 per cent in 2007. For this year, the government had originally estimated growth at 2.5 per cent but the European Commission has scaled it down to 0.7 per cent. Growth is then expected to recover mildly next year. As expected, much of the drop in exports in January was attributed to lower sales by the electrical machinery sector. What is somewhat surprising is the drop in exports of pharmaceutical products, down from €16.2 million to €9.9 million.

Registered unemployment in the first month this year was up by 8.12 per cent over the same month last year - 6,988. Of the jobless, 4.2 per cent are people under 25 and 3.9 per cent are 45 and over. With the jobless figure growing, it is no wonder that the Prime Minister is insisting all the time that his government's focus is on efforts aiming at generating jobs. The problem is that when the economic conditions abroad have become so difficult, it is not easy to attract new direct foreign investment. So many large firms abroad have, or are, in the process of laying off workers that possibilities of attracting new investment inevitably become leaner.

Not only that but, in addition to this, a string of firms relying on export trade are beginning to feel the impact of the drop in export orders. The government has already managed to help out at least three firms directly hit by the recession, saving jobs and, equally important, offering incentives to help them fight off problems. Through this action, the government is also safeguarding the firms' investment in Malta. Indeed, two of them now plan to invest an additional €8.5 million between them in their operations. A problem that has still been unresolved is that of ST Microelectronics, which plans to shed 450 workers this year. In the light of a situation that is none too pleasant, to put it mildly, it naturally becomes even more important for the country to remain competitive. Greater efficiency in the services provided to industry helps and the task force set up by the government to look into the needs of industry could perhaps investigate this further to see whether it can help remove any outstanding bottlenecks. But what could ultimately help most is self-help, in the way a trade mission to Prague in the Czech Republic has just done. Only recently, another mission accompanied the President to Warsaw, in Poland.

A forward-looking, aggressive approach aimed at fighting off the impact of the downturn may not work miracles but it would certainly be better than just moaning or relying on the government's work.