We continue to live in troubled times. This is not simply a reference to the situation in Libya. That, in itself, is trouble enough. It is becoming increasingly evident the exposure of the Maltese economy to the stalemate produced so far by the confrontations taking place there are larger than expected.

Scores of enterprises and hundreds of workers are affected. These include companies which had invested directly in Libya and Maltese individuals who worked there, in the oil fields and in the commercial and tourist sectors. As well as Maltese businessmen who exported – or re-exported – goods and services from Malta, and the employees they had here handling these activities.

The longer the Libyan stalemate lasts, the larger and darker will this picture of woe grow. Luckily, many of the businesses exposed to Libya have other activities, which remain untouched and could even be growing. As for the displaced workers the Maltese economy might be resilient enough to absorb a number of them.

But the net negative effect will take its toll, and will impact on the Gross Domestic Product and its rate of growth. There is little that the government can do in these bleak circumstances, other than slow down tax and social security receivables, and accelerate its payments due to affected sectors of the economy. The Employment and Training Corporation can also speed up its processes whereby it offers retraining to unemployed individuals.

Yet all this is only one factor in the troubled times we live in. For example, the economy continues to grow, but does so unevenly among its various sectoral components. One major sector, the construction industry, remains in the doldrums.

Many of those who operate in it live the paradox of continuing to develop property, which sells ever so slowly if at all, in the knowledge that if they stop doing so they will make valuable resources idle and may not find them again quickly enough should there be an upturn.

We do not have ghost villages of unoccupied property, as there are in Ireland, again for the basic fact that a number of leading Maltese developers have a reasonably diversified operations’ base. But the stock of unsold units grows and resorts to barter instead of cash payments increases, ultimately affecting the cash flow of direct and sub contractors.

On the external front, invisible earnings remain strong, particularly because interest in the financial sector is still healthy. This was demonstrated by the decision of the giant Spanish insurance group Mapfre’ to increase its already substantial shareholding in Middlesea Insurance p.l.c by acquiring the shares Munich Re of Germany held in the company.

Manufacturing exports are also holding up well. Yet the recovery from the recession in our main markets is hesitant and consumer confidence in a number of them fluctuates rather than rising steadily.

On the financing front the Malta Stock Exchange has entered a long downturn, affecting those who are invested in it. All these factors, including the pluses in the economy in the form of relatively low unemployment and modest real growth despite the rising Retail Price Index, are duly reflected in the financial side of the economy.

This was confirmed by the Bank of Valletta p.l.c. in presenting its results for the first half of its financial year, which ended in March.

The bank did reasonably well, with profits not far below those registered in the comparable six months a year ago, allowing it to maintain its dividend.

To the extent that profits fell back this was mainly due to the fact that the bank increased its collective (general) provision against its loan and advances book. Roderick Chalmers, the bank chairman, was careful to emphasise that the situation remained very manageable. But the higher provision is a fact. It probably was demanded by the remaining weak state of the construction industry, part of which includes big clients of the two main banks, and borrowers with business in Libya.

The national airline is also a client of the BoV and its loss position would have been another factor urging higher provisions.

The investment portfolio of the bank suffered from the weakness of our Stock Exchange, with marking down to fair value turning to negative the appreciation evident a year ago, affecting the profit outturn.

On the other hand, the bank’s deposit base continued to expand and the solvency position remained more than adequate. This enabled Mr Chalmers to be confident about the outcome of a fresh stress test for which it has been selected.

Malta’s strong banking sector, also reflected in the robust results of the smaller banks, is one of the mainstays of the economy.

Mr Chalmers was able to look the mixed situation in the eye, but assure the bank’s clients that the institution will be there to help them out of any bad patch.

Borrowers have to help themselves, particularly by trimming costs, like Farsons has done. But they must have breathed a sigh of relief when digesting the message of BoV’s chairman.