Editorial

Just when a number of economic indicators suggest that the island’s economy has continued to recover, news comes from Brussels that economic sentiment in Malta is down by 2.9 points, the first decline in seven months. In the light of the economic improvement, this does come as a bit of a surprise but, maybe, it would be wiser to await the next assessment before jumping to conclusions, more so when the economic sentiment indicator continued to improve in both the European Union and in the eurozone, something that is likely to have a favourable impact on performance of the local economy, particularly manufacturing and tourism.

The latest most encouraging indicator for Malta is the rise of 3.9 per cent in the gross domestic product. This is the third successive quarterly rise, meaning that the island is now well out of the recession. Also quite positive is Malta’s latest placing in the global competitiveness index, up by two places, to the 50th position worldwide.

Only a few days ago, the Prime Minister said when giving a snapshot of the economic improvement that exports were up by 35 per cent; industrial production in May was at its highest level in 18 months; unemployment was down and there was an increase of 3,700 jobs in one year. Besides, the deficit was down too, although it is still above the required EU threshold. The trade gap may have widened in July but, on a year-to-year basis, it narrowed and there were increases in exports to Germany, France and Italy.

All this should at least clear a bit of the clouds that have been gathering over irregularities and issues that reflect serious administrative shortcomings. But even in the economy proper, it does not mean that all is well or that the future is plain sailing. It never is, more so now when so many countries are still struggling to reduce the deficit in their governments’ finances. To do this, they have been forced to launch austerity measures that whipped up strong opposition and street protests.

Malta did not have to resort to the same kind of measures other countries took to put their house in order but this did not mean the country was not hit by the economic downturn. With the economy being so small, vulnerable and dependent on the vagaries of economic trends elsewhere, as other economies are, it could not have been otherwise. But, to its credit, the government handled the situation well when it directly sought to help out those firms that needed the assistance most. In doing so at the right time, it helped save jobs and, in the case of a number of firms, it also managed to help them strengthen their operations.

By contrast, however, smaller firms did not get the support they expected. A credit scheme specifically meant to help small firms, first announced in the Budget for this year and which had to be launched earlier this year, has still not seen the light of day, though, apparently, through no fault of the government.

The scheme had to be financed by the European Union and there appears to have been a bureaucratic hitch. Even so, perhaps the government could have remedied the situation by working out a different aid scheme to immediately help small firms that required assistance to ride out temporary difficulties. Greater effort should now be made to solve the bureaucratic hitch, whatever it is, without further delay.