The National Statistics Office has just published the data on international trade for the first six months of this year. There is an immediately noticeable widening of the trade gap, which may seem to be bad news for the Maltese economy. In fact, the trade gap widened from Lm162.4 million for the first six months of last year to Lm185.7 million for the same period this year. This deterioration in the trade gap can be attributed to a number of factors that ironically all seem to point to a positive direction. In broad terms, we have had an increase in exports, but we had an even bigger increase in imports.

In effect total exports increased by Lm18.2 million in the first six months, representing an increase of 4.2 per cent. What is even more encouraging is the fact that the percentage increase in exports for the month of June was of 8.1 per cent, thereby indicating a positive upward trend.

In real terms, the increase has probably been greater given that a number of firms have been reporting a decrease in their selling prices. Moreover this data seems to be going against the trend experienced by countries, whose economy depends on export performance to a similar extent as ours does. The case of Singapore is one such example. Singapore has experienced a drop of seven per cent in its industrial production.

It is equally encouraging to note that exports have increased across all sectors of industry except for two minor ones, namely the beverages and tobacco and chemicals sectors. Together these two sectors account for 3.3 per cent of our total exports. All other sectors registered increases in export sales that suggest that the exporting manufacturing sector is managing to withstand the challenges posed by the international economic slowdown.

This positive indication is confirmed by the data that emerged from the latest Business Perceptions Survey carried out by the Central Bank of Malta.

This survey showed an increase in business confidence in the second quarter of this year, reaching the highest level ever since this survey was first undertaken. The survey furthermore indicated a sharp pick-up in sentiment among exporting manufacturing firms and among firms in the tourism industry.

With regard to imports, the increase has been of Lm41.6 million, an increase of seven per cent. Although we have had increases in the imports of industrial supplies (i.e. raw materials), capital goods (i.e. machinery and equipment) and consumer goods, the bulk of the increase has been in the first two.

Increases in imports of consumer goods imply mainly an increase in the distribution and retailing sector of the economy, but an increase in imports of industrial supplies and raw materials implies an increase in activity mainly in the manufacturing sector. An increase in the imports of capital goods implies an increase in investment across the board.

The increase in the imports of industrial supplies in the first six months of this year when compared to the same period last year has been of 5.7 per cent, while the increase in imports of capital goods has been of 13.3 per cent. The increase in imports of consumer goods has been of 5.2 per cent. The increase in imports of capital goods has been accompanied by an increase in expenditure in fixed capital assets (i.e. investment), as evidenced in the data on the gross domestic product for the first quarter of this year, even though we had a shrinkage of the GDP in that quarter.

There is still not an end in sight for the economic slowdown that we have had in the international economy for the last two years. This in itself is a cause for concern. However, we have also shown that we can hold our own in the face of such a slowdown. This was achieved at some cost to employees and employers alike. Other countries appear to be gearing themselves up for the time when an upswing in economic activity occurs. This is crucial because any upswing in the international economy is not expected to be vigorous.

Therefore only the fitter and leaner economies will gain from such an upswing.

Somehow we are managing to weather the storm, but this is not the time to be complacent. It is rather the time to effect those reforms in our economy that are still inhibiting it from producing at its maximum potential.

This is what will make firms operating in Malta more competitive in the international market, thereby strengthening our export performance.