Will Malta manage to climb out of the recession this year? The Prime Minister, Lawrence Gonzi, believes the island is on track to emerge from the recession by June, in line with predictions, but, he quickly remarked the other day, this depended on whether tourism picked up. This is, of course, a very important rider in view of the inherent unpredictability of the market, and, also, if not particularly so, of any new developments that may arise following the deep economic difficulties in at least four EU countries.

In the Budget for this year, the government is forecasting economic growth at 1.1 per cent but, in sharp contrast to this, the business community is forecasting a growth rate of 1.8 per cent, at least according to a survey by Business Europe. Maybe, the businessmen interviewed at the time the survey was carried out did not factor in, or did not make an allowance for, any rise in the utility rates.

Whatever the case, it is rather early to see if the recovery forecast will hold or not, though the economy registered a slight rise in growth in the third quarter of last year. A great number of points have been raised in the controversy over the hike in the utility rates but the discussion has generally veered away from issues that lie at the heart of the matter, and, for obvious reasons, concentrated mostly on the impact they would have on the pockets of the consumer. It goes without saying that this is not a trivial matter but it is not that the government has ignored this altogether either, though it could have tackled it differently. And it also remains to be seen to what extent the compensation it is offering will ease the burden.

On the other hand, however, other matters have to be considered in the equation, such as the desirability or otherwise of keeping subsidies and whether it is more useful to divert such funds towards more profitable ends. Discouraging fuel waste and promoting alternative energy sources are other important factors.

With government revenue down following the slowdown in economic activity, it was, and still is, important not to exacerbate pressure that could lead to the widening of the deficit in government's finances as this would push up the national debt. So, contrary to what others may, for purely short-term political reasons, argue, this is another important factor that would have to be considered in the government's decision to raise the utility rates.

The biggest problem right now is getting new foreign direct investment to help bring about a higher rhythm of economic growth. Considering the financial turbulence hitting so many countries, the island has not been doing all that badly, as recent announcements of new investments suggest. The financial services sector has continued to expand and new lines of economic activity, such as aircraft maintenance and the pharmaceutical industry, are growing even further too. Such new lines are not developed overnight but through consistent encouragement and incentives.

Through tailor-made government help, a string of firms in difficulties have not only managed to weather the storm but have also made new investments. So, while the government may well be justifiably accused of a number of shortcomings in the handling of key issues, it has also made headway in a number of matters that have a direct bearing on the health of the economy. Going for growth is proving a harder task than ever.