Slight growth in economy

Malta registered a slight growth during the third quarter of last year, the first expansion of its economy in a year, according to the latest data issued in Brussels.

However, economists are playing down this small recovery, saying it cannot yet be interpreted as showing that Malta is out of recessionary mode.

Eurostat's seasonally adjusted data show that Malta registered a GDP growth of 0.4 per cent during the three months between July and September of last year compared to the previous quarter.

Since the end of 2008, Malta had registered a contraction in its economic activity, with the economy shrinking by minus one per cent in the last quarter of 2008 and by -0.8 and -0.7 per cent respectively in the first two quarters of 2009.

"The fact that Malta has for the first time in 2009 managed to register a growth in GDP is a good sign that the economy is starting to respond to the various government injections in response to the global crisis," a Eurostat official told The Times yesterday.

"However, it is still very early to say that Malta is out of recession as this is just seasonally-adjusted data that means it can vary considerably from one quarter to the other," he explained.

Economists who spoke to The Times said that although the spurt indicated by Eurostat was positive "the data are still not that reliable as they are based on seasonality which in Malta, due to its small economy, is very variable".

They said one of the factors that may have twisted the latest data was tourism earnings which were at their best in the third quarter of the year.

"It is a known fact that Malta's economy receives a major boost through tourism earnings between June and September. This may have contributed to this sudden growth," one economist said.

In economic theory terms, a recession ends when an economy starts registering growth following two consecutive negative quarters.

Last month, Prime Minister Lawrence Gonzi had said the government was hoping Malta would be completely out of recession during the second half of 2010.

However, if Malta continues to register further growth when the statistics for the fourth quarter of 2009 are published, the island may well be sailing out of the storm before that.

Eurostat said that during the third quarter of 2009, the average GDP of the 16-member eurozone registered a growth of 0.4 per cent, the same as for Malta. Almost all the eurozone members posted growth except for Spain, Greece and Cyprus, still considered to be in recession and registering negative growth.

The EU's biggest economies, Germany and France, posted 0.7 and 0.3 per cent respectively while the UK, which is not a member of the eurozone, remained in recession with a negative growth in the third quarter of -0.2 per cent.