Editorial
Economy: Light at the end of the tunnel?
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.
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Christian Mifsud
Mar 18th 2010, 18:48
We have been self confident and optimistic for the last 20 years and we are still far away from the standard of living of the other european countries we were promised by the PN goverment
c.camilleri
Mar 18th 2010, 17:30
In my view you should have included Karm Farrugia's opinion in your editorial as it would have given it added weight. (17th March) This economists started his letter by stating that economists automatically quit the profession the moment they leap onto any political bandwagon. And yet you laid too much stress on what economist E. Scicluna said.
laurence schembri
Mar 18th 2010, 17:16
@ N. Calleja
As usual it all boils down to politics. Manet or Monet, would have been proud of you. you paint everyone with the same brush, but unlike Picasso`s Blue Period, you go for Socialistic Red.
Another one living on cloud nine.
c. camilleri
Mar 18th 2010, 17:12
Oh how i would like to live the day when we have a labour Govt and see these parrots below without anything to do as everything will be ship shape.
c. camilleri
Mar 18th 2010, 17:06
In my view the inclusion of the opinion the economist Karm Farrugia ( Times 17th March) would have had an added weight to your editorial.
N.Calleja
Mar 18th 2010, 16:39
The gloomers and doomers came all-out to find fault in this editorial's reasoning. They simply cannot swallow the fact that, against their wishes and prediction, Malta is faring much better that other European countries under Socialist rule. They are now gleaming with glee because the Monsignor played to their tune. Il-Monsignor should make a better analysis by outlining the real cause for many who live in the poverty line. Many spend all they have on any type of vice they have and leave the necessities behind them. And they beg for help!! They even let their children starve while they spend their money on senseless trivialities.
J.Cassar
Mar 18th 2010, 15:49
We cannot talk ourselves out of a recession as much as we did not talk ourselves into this recession. Happy talk is not an alternative to hard talk and a rigorous self assessment aimed at creating a sense of urgency on the need to continue reforming our economy.
The media should leave the happy talk to the politicians who already have a problem with their lack of credibility.
victor caruana
Mar 18th 2010, 15:26
quote: '...'the country needs greater doses of self-confidence and optimism'.
yea: groceries are generally paid by self confidence and optimism : quite a cheap currency.
Muscat. Pat
Mar 18th 2010, 15:13
The latest buzzword emanting from the PN and Co is that anyone who has a social conscience is a moaner and an doom and gloom prophet; lucky I am not one of those "mittle klass" people - see Caritas report-sliding down the poverty line!
lgalea
Mar 18th 2010, 15:05
There may be a light at the end of the tunnel, but we are going away from it not towards it. Let's wait and see whether we will find out that we are in a similar situation to Greece when we have a change in government at the next election. But if we do, the eu should SHUT UP because it shouldn't expect the next PL government to penalize the people to pay for the present administration's mistakes and excesses.
laurence schembri
Mar 18th 2010, 14:07
Truly surprised that the Editorial did not include the name of Mgr.Victor Grech as a doom and gloom spreader. Why only the LP? The only problem is, that magic wand that the Editor is referring to, is not creating wealth, but the opposite, ask the Monsigneur.
C.camilleri
Mar 18th 2010, 13:13
The conclusion of your editorial holds no water, cause its the PN and not the PL who have been in office for more than 22 years, and it is astonishing how you pretend the opposition to shut its mouth and say nothing.
If we are in trouble waters you can only point your finger at the PN and no one else.
Albert Farrugia
Mar 18th 2010, 11:08
@james grech
...ghax skont it-Times, l-unika haga li ghandu jaghmel il-Partit Laburista hu li jaghlaq halqu, u ma jikkritika xejn. TInsiex li skont il-Prim Ministru, kif qal lit-Times nhar il-Hadd, l-Oppozizzjoni ghamlet minn kollox biex ittellef lill-gvern fl-ahhar sentejn. Minghajr ma qalilna xghamlet ezatt. Forsi ghax ikkritikat? Forsi ghax fethet halqha? Anki r-regoli bazici demokratici n-Nazzjonalisti qed jinsew....li tghid l-opinjoni tieghek, u li ma tkunx taqbel hija ghall-Prim MInistru "tfixkil", u ghat-Times "gloom and doom".
james grech
Mar 18th 2010, 10:51
Imma kif fl ahhar tal mazzita dejjem hemm iz zbiba f dawn l artikli? The gloom and doom that you attribute to PL are in my opinion due to a lack of motivation and the unhealthy and untimely decision making by the Gov. If the Gov. has not been able to convince ppl that the hiking in utility tariffs is reflecting the correct expenses at Enemalta then its its own fault. Gov has also failed to convince in the way that the contract to BWSC was handled, as was the way in which HFO was chosen over gas, which is cleaner (yet the new extension will be converted to gas for E27M in the near future). Other operational issues such as the handling of the environment and its development by MEPA have also not been that transparent. So at best the opposition was riding on the turmoil and havoc instilled by the Gov itself, but then again this is what any opposition does, have we forgotten what the PN in opposition used to do?