In the real world, people are usually not very impressed by statistics and prefer to concentrate on getting on with their lives despite the numerous challenges they face on a daily basis. But an analysis of certain statistics helps us understand whether the economic pain we are feeling is real or is just a figment of our imagination.

The most alarming statistic that has been confirmed recently is the fact that in May our rate of inflation at 3.4 per cent was once again the highest registered in the euro zone. In fact, the inflation rate in the euro zone in May was 0 per cent. The Nationalist government continues to show its embarrassing impotence in the face of this serious problem.

Of course, the main reason behind this high inflation is the fact that government continues to charge exceptionally high rates for water and electricity despite the falling fuel prices in international markets. Thus, in the first part of this year our prices for water and electricity increased by over 10 per cent while other countries in the euro zone area reduced their prices by 11 per cent. This insensitive policy is having a knock-on effect in all other economic activities that in turn put upwards pressure on our inflation.

Just as alarming is the fact that our GDP in the first quarter shrank by 3.3 per cent in real terms over the same period last year. Were it not for the fact that the government is including terminal benefits paid to shipyard workers in the computation of its economic growth, the GDP decline would have been even greater. So far we have seen only limited reactionary policies to stop job losses, but no proactive policies to promote economic growth and new investment.

The Minister of Finance has confirmed in Parliament that over 26 companies that are involved in export have asked for government assistance to save jobs. Only six companies have benefited so far and one hopes that the rest will get the help they need as soon as possible. But more than that is needed, and once again we appeal to the government to propose an incentives package to stimulate the economy. It can, for instance, start with a review of the energy prices to help industry cope with ever increasing costs of production.

Tax revenues in the gaming sector are reported to have fallen by 11.5 per cent in the first quarter of this year. This industry has so far proved to be very resilient to the negative effects of worldwide economic recession. But it is understandable that with consumers being affected by the economic downturn in various countries, online gambling would ultimately also be adversely affected.

Statistics relating to a fall in property prices, as contained in a report by the Chamber of Commerce, Enterprise and Industry, are also cause for concern. The CBM statistics on property prices have a fundamental weakness because the statistics are based on advertised prices, rather than the real prices at which contracts are agreed. A 15 to 20 per cent fall in prices in just one year is almost unprecedented in the local context.

As long as consumers feel uncertain about their future, there will be little appetite for investment in property or any other long-term instruments. To complicate matters, demand from overseas investors, especially those coming from the UK, is understandably low.

However, the most depressing indicator has been the fall in tourist expenditure in the first three months of this year. According to the Malta Hotels and Restaurants Association, the expenditure by tourists in the first three months of 2009 was 21 per cent lower than that of the same period in 2008. Tourism has a big multiplier effect on our economy and when it stalls, as it is doing at present, the whole country feels the effect.

The government's let's-wait-and-see attitude is not going to help us move out of this mess fast. In many ways it has partly brought about the situation by its imprudent management of public finances in the months leading to the last general election. The chickens have now come home to roost.

With ECB President Jean Claude Trichet warning countries like Malta with excessive budget deficits that as from next year they have to start to bring their fiscal deficits back below the three per cent mark, the Nationalist government may be losing another weapon to fight the economic downturn.

Dr Mangion is the Opposition spokesperson for finance