It has confirmed that our economy has now been in a recession for four consecutive quarters.
If you take seasonally adjusted data you can count-in the third quarter of last year as well. So that puts it at five quarters. A far cry from what was believed by some that we would not be affected for some reason or other.
The sectors identified by the National Statistics’ Office (NSO) are based on nominal values.
Economists base their judgment on real value-added data which are not given by productive sector by the NSO.
What we have however indicated that the recession is originating in the exports and tourism sectors and in investment sector, which is suffering severe cuts in expenditures. These sectors in turn affect other sectors but not to the same degree.
There are many ways how one could measure “severity” of a recession. My reading is that Malta is about to be among those countries in the Eurozone most hit by it.
It is true we seem to have entered one quarter or so late, but it looks like we will be taking the longer than most to get out of it.
Malta’s competitiveness has been meted a hard blow during a crucial and delicate time of the global crises, with the energy and water tariffs, resulting in a high domestic inflation at a time of global deflation.
All external sectors are affected negatively. Financial services seem to have escaped this due to certain factors unique to that sector which brought a number of companies to Malta.
We will find ourselves burdened with this lack of competitiveness once global demand will start surging back.
What the PM has heard from the Commission regarding our outlook could be the closest we can to a realistic outlook.
But I fear that unless we see how the next energy tariffs saga will finish, I will not exclude other scenarios including more negative ones. Furthermore one would want to see what kind of recovery one is envisaging. Is it a jobless recovery? Is it a sluggish one like we experienced between 2002 and 2005? Recovery by itself is too vague a word, no matter how good a word it is.
Before we start discussing the timing I would like to see a plan for an exit strategy. We do not have such a plan at the moment. I expect the Minister of Finance to have one and announce it soon, just like other Eurozone countries have done recently.
