Editorial

Only days after the Prime Minister, Lawrence Gonzi, was quoted saying that Malta was on track to come out of the recession by June this year, the National Statistics Office announced a rise of 0.5 per cent in the gross domestic product in the fourth quarter of last year. Even though the growth is small, technically speaking, Malta is therefore out of the recession, something about which the Prime Minister was obviously "very pleased". On the face of it, he should be, but, maybe, it is still a bit too early to start making much of this before the recovery trend is confirmed, hopefully, with the results for the first quarter of this year.

In other words, since it is difficult to say at this stage whether Malta is completely out of the woods, it would seem unwise to rush to conclusions. As it happens, only three days before the GDP growth figure was announced, the National Office of Statistics released data that was not altogether encouraging. The figures show that turnover, investment and employment in manufacturing declined in the fourth quarter of last year.

Turnover of the sampled manufacturing enterprises fell by 1.6 per cent and investment by 54.8 per cent "on account of a general decline in investment in the major manufacturing sectors". So, while it is true that the country has managed to attract some new foreign investment these past few months and that some established firms are announcing new expansion plans others have clearly felt the blow of the slowdown in economic activity last year.

An economist, Edward Scicluna, a Labour member of the European Parliament, has come out contesting the Prime Minister's declaration that Malta has come out of recession, bringing up a number of points to prove his point. He argued that a breakdown of the GDP growth figure by the NSO showed that, between the last quarter of 2008 and that of last year, public and private consumer expenditure, in nominal terms, fell by €6 million, investment dropped by €21 million, receipts from exports of manufacture and tourism together were down by €42 and compensation of employees declined by €14 million.

What did go up, he explained, were gross operating surpluses, up by €33 million. But then, he goes on to say, these were made up of an increase of €37 million in operating surpluses of banks and other financial intermediaries and a fall in €4 million elsewhere in the rest of the economy. Well, the economist does have a point, in that, clearly, key sectors of the economy have not recovered yet.

Meanwhile, provisional data show that the January index of industrial production increased by 1.4 per cent over the previous month and by 14.6 per cent over the corresponding month of last year. How much of this has translated in a rise in exports has yet to be seen. However, given all the figures that are coming out, including the slight seasonally-adjusted growth figure for the third quarter last year, as given by Eurostat, the note of cautious optimism which both the Prime Minister and the Finance Minister are striking would seem to be justified.

Contrary to what the Labour Party may think, there is no magic wand that could create wealth. Therefore, rather than the doom Labour keeps spreading, even when the general election is as yet so far away, the country needs greater doses of self-confidence and optimism to overcome the seemingly endless string of difficulties coming its way.