If, as The Business Observer rightly said, the Finance Minister had much to smile about when he launched the pre-Budget document, he has a lot to think about too.

For starters, the minister may perhaps need to update his global economic growth forecast.

China’s growth rate is on a downward trend. It dipped to 7.4 per cent last year after hovering at about 10 per cent for decades. The growth rate this year is expected to be seven per cent. In the words of The Wall Street Journal, the slowdown comes at a vulnerable time for the world economy.

It may be somewhat early to forecast how matters will actually shape up on the ground, however, as things stand now, the slowdown could very well dim the kind of optimism that was expressed by Edward Scicluna in his review of the international scene in the pre-Budget document.

Since China is the second largest trading partner in the European Union, it goes without saying that a slowdown in that country will affect growth in the EU. In fact, according to The Wall Street Journal, the eurozone risks experiencing a third recession in the space of six years.

One study suggests that the Chinese slowdown will affect not just commodities and capital goods but also global consumer demand. This may well have an effect on Malta’s export trade but the country has to wait and see to what extent the slowdown will impact EU trade.

The importance of China in world trade today can be measured from the fact that from just two per cent of world gross domestic product in 1995, its share in the 2000s shot up to 15 per cent. What all this really means is that Malta has to ensure that it becomes more competitive and flexible in order to see how it can fend off any fall in demand for its goods.

The pre-Budget document speaks about an improved level of competitiveness when, in fact, the country does not score high marks in at least two very important reports. According to the World Bank’s Doing Business report, for example, Malta is becoming less, not more, business friendly. It has slipped four places, to 94th place out of 189 economies.

The score should give both the Finance Minister and the country itself a lot to think about, more so when a string of the shortcomings that keep dragging Malta down have been known to exist for years.

In another study, the Global Competitiveness report 2014/2015, Malta ranks 47th out of 144 countries. Again, the ranking is far from satisfactory.

To his credit, Prof. Scicluna did not try to downplay the rankings and had no difficulty pointing out the deficiencies in his pre-Budget document.

Inefficient official bureaucracy, which the government had committed itself to tackle with great vigour before the election, still ranks as one of the major obstacles. But there are other shortcomings. For example, Malta is classified as having the least friendly business environment among the 28 EU member states, a matter that surely ought to set alarm bells ringing with a force that will urge the country to make greater efforts to put its house in order.

Skill mismatches and making Malta generally more attractive for foreign direct investment are other matters that the Finance Minister has to think about. If, in spite of the deficiencies mentioned in the two reports, Malta has been able to make impressive gains, the improvement will be even greater if it addresses the domestic obstacles in its way.