Several days ago the GRTU (the Association of Retailers and Traders) published the results of a survey carried out among its members on the performance of sales in the past three months.

I believe it is a very positive thing for an organisation like the GRTU to undertake such research because the information that emerges from such studies helps to better shape policies and also provides the public with information on the perceptions of the segment of the economy it represents.

It would be easy to dismiss such research as being biased or as partial in that it covers only a part of the category that is classified as retailers and traders. The GRTU would do itself and the community a service if it gives more detailed information about the structure of the sample that responded to this survey.

Moreover, the respondents were those that had an interest in answering the questionnaire. We do not know the perceptions of those who had no interest in answering the questionnaire even though they certainly do have their opinions and this is expressed through the decisions that they take in the management of their business.

However, dismissing such research would mean ignoring what a segment of the economy has to say, even though one always has to keep in mind that research of this nature only provides an indication of how those who responded feel.

Even so, one aspect that gives an element of credence to this research is that it reflects what other business perceptions surveys say. The GRTU survey indicates that retailers feel they did worse this summer than last summer.

Essentially, other surveys carried out by other institutions did indicate that those trading on the local market are less optimistic about their business than those trading on the international market, even though the level of uncertainty internationally is far greater than that which should exist locally.

I state this because the data on the GDP published by the National Statistics Office shows that a significant part of the growth that we have had in the economy in the first three months this year is attributable to consumption expenditure.

So the question begs itself - if consumption expenditure is increasing, where and how is the money being spent?

It could be that expenditure patterns are shifting dramatically for various reasons. Are young people and children today influencing family expenditure to a greater extent than previously? Does the decrease in the number of children being born have an influence in expenditure patterns? Without sounding too cynical, should one ask whether those who sell air-conditioners have done any better than last year, especially when compared to those who sell more traditional products like shoes and clothes?

Obviously, this change in expenditure patterns did not happen in 2002 but is the result of social developments which have been in motion for the past 15 years, especially since the then Nationalist government had decide to start doing away with import restrictions, thereby giving a greater choice to the Maltese consumer.

However, one would think that this year these developments have become more pronounced and shall continue to become even more pronounced in the next couple of years.

Retailers taking part in the GRTU survey seem to be well aware of this as one in five respondents blamed competitive prices while another one in five blamed the increased competition for a performance that was not as good as expected.

Competition featured highly even in the respondents' expectations for the future. One in 10 respondents expected to have even more competition, while one in five expected less, presumably since some retailers would not last the pace, a situation that is not at all abnormal given the excess supply that is known to exist at the retailer level.

However, what continues to strike a discordant note in my opinion is the fact that one in five respondents in the GRTU's survey claimed that the main reason for their performance not being up to expectations is the lack of cash in people's pockets. This contrasts with the increase in consumption expenditure component of the GDP.

So where does the paradox lie? The paradox becomes even more accentuated given the developments in the financial sector - an increase in the amount of savings held by commercial banks and an over-subscription of bonds issued.

This implies that consumers appear to be more willing to save than to spend. There could be two explanations for this: the run-up to a general election and for a few months after it, consumption tends to slacken.

This is what happened in 1992, 1996 and 1998. The general elections of 1987 and 1981 cannot be considered given the unnatural controls on consumption that existed at the time.

We are now in the throes of the run-up to the next general election and, as such, history could be repeating itself.

The second explanation could be the wealth effect experienced by Maltese that had invested savings in shares and collective investment schemes. Some had increased their consumption on the basis of a rise in the value of their investments. The drop in the value of these investments could have forced many to reduce their consumption until they saved enough money to make up for this drop.

This without mentioning losses incurred by those who had invested in Latin American bonds. So is it a case of a lack of cash or a lack of a willingness to spend it?

Even though our economy is small and growth has to be export driven, the retail and trading sector is still an important part of it, providing employment to well over 10,000 people directly or indirectly. For this reason, one needs to understand developments in consumption patterns well in order to enable this sector to thrive.

Key institutions and the social partners all play an important role in this task. It should not be left just to the GRTU, not because the GRTU does not have the necessary expertise, but because this is not a sectoral issue but a national one.