It never ceases to surprise me how we manage to make a polemical political issue out of everything, instead of trying to have an intelligent discussion about, at least, technical matters. The latest example of this national tendency is the Gross Domestic Product and the recession.
Like with most other countries in the world, the global downturn in economic activity which followed the global financial failure pushed Malta into recession. Economists give recession a very simple definition.
If a country has two consecutive quarters of decline in its real GDP, it is said to be in recession - the economy has receded from its growth path.
If it continues to experience negative growth, it remains in recession. If it then registers a quarter of positive growth, it is considered (somewhat illogically) to have moved out of recession.
What economists and others who take an interest in such matters, including politicians, argue about is not the factual being or moving out of a recession. They look at the extent of the GDP movements. They try to understand the depth of the recession, how much real output has been lost, how far into the doldrums, in layman's terms, has the recession plunged the economy.
When the negative trend is broken, analysts try to understand how effective is the break, what is leading it, and whether it will last.
That kind of reasoning and approach applies everywhere else but Malta.
The government and authoritative observers of the economic scene, primarily the Central Bank, were expecting real growth to resume later this year, possibly in the second or third quarter. The Bank, in particular, signalled that, when recovery arrived it might not initially be strong, or at least as strong as required to make for the real loss in production of goods and services.
Suddenly, to everybody's surprise, when the National Statistics Office released the GDP figures for the whole of 2009 they showed that the December quarter saw an increase in GDP over the July-September quarter. Technically, therefore, the economy had moved out of recession. This called for interpretation on several counts.
First of all, was the NSO presenting final or provisional figures? Secondly, what accounted for the return to overall growth? Thirdly, how had the various sectors of the economy fared? Fourthly was the return to growth sustainable? Fifthly, would it be jobs led, meaning that unemployment may be expected to start to fall?
All these questions are relevant. If the 2009 figures, including those for the final quarter, are not final but provisional, caution recommends that they be treated carefully, and certainly not with a lot of fanfare. If growth was not shared extensively within the economy, there would be income and wealth disparities in the making.
If jobs did not show a net increase, the scourge of unemployment would still be felt.
The jobs indicator in particular has been worrying various countries which technically moved out of recession. They want the jobless total to fall, but growth was not - is not - being accompanied by job creation.
Similar caution should have been used in Malta. Instead the Prime Minister trumpeted to all and sundry that Malta was out of recession much earlier than expected. Which it was - but, was that provisionally so? And if the figures were final, how much growth had been realised and how was it shared?
Surprisingly for a well-mannered man the PM did not go into any of that. The important point was political - under his administration Malta was performing better than other countries, including the mighty and the high. The opposition was not to be outdone. Its leader said Malta was not really out of recession. Various sectors, including that made up by employees, had lower incomes even in the fourth quarter.
True, but that did not mean the overall recessionary trend had not been broken, just.
The Labour Party's chief economist, respected by everyone and now an MEP, came out saying that Malta was not even technically out of recession - year-on-year the December quarter showed a reply. That earned him a gentle rebuke from another much-respected socialist economist, who pointed out that growth and recession are measured over subsequent quarters, not on a year-to-year basis.
Such confusion is unnecessary and sad to behold. There is no justification for the Prime Minister to crow over the December GDP data, but neither can Labour say that the recessionary trend was not broken, provisionally at least.
All that aside, there is a need to understand that we are not out the woods, yet. We depend on the performance of the countries we trade with. Those of them that have returned to growth have done so very weakly. As a direct result, if our growing sectors outperform on a net basis the weaker ones, growth will still remain slow. There will not be much room for boasting or condemnation.
Only for much stronger focus and hard work.