When the NSO published GDP statistics relative to the second quarter (April to June) of this year, my attention was drawn to a peculiarity. Out of the blue consumption increased by a staggering 5 per cent which is a record for the last few years. On deeper analysis it transpired that all of a sudden retail and wholesale profits skyrocketed by a record 22 per cent.

Reacting to the figures of the NSO in a press release, while reiterating that the main contributor to the country’s 3.2 per cent economic growth in the second quarter was government expenditure, I also pointed out that in relation to the record profits reportedly registered in the retail and wholesale business “a more detailed analysis is called for to explain how this sudden surge in profits could have happened – had profits remained at normal levels the rate of economic growth in the second quarter would have been much weaker.” (10/09/08)

Strangely there was an ominous silence from the Government and from the NSO. Usually the Government pounces on opposition speakers when they dare question statistics. After last year’s controversy about NSO statistics the least I expected from the NSO was to come forward with some form of explanation on these amazing profits. I was very careful not to politicize the matter and asked for elucidation rather than pegged innuendos to my press statement. Why am I still inquisitive?

Economic indicators contradict these statistics.

In the first place, about the same time that this “boom” in retail and wholesale business was supposed to be happening the GRTU published a survey on the performance of business at the last Trade Fair. The results were to say the least demoralizing with the majority of exhibitors reporting a drop in sales and blaming it on the consumers’ weakening purchasing power.

There is evidently a grand canyon between GRTU surveys about its members’ sales and NSO statistics on their profits. But if NSO statistics are correct then the GRTU should be very happy with the performance of its members and with the stellar profits they made in the second quarter. As far as I’m concerned, on account of the new venue at which the Fair was organized, which may have disheartened consumers from attending in their usual numbers, consumers may have shopped elsewhere - so I will give the benefit of the doubt and look the other way.

Secondly, at the same time that the NSO was reporting a record boom in profits in these two sectors, the consumer confidence index of Eurostat was and still is showing that confidence among consumers in Malta is down and negative for the whole of 2008. I cannot reconcile the current consumers’ loss of appetite to buy with a boom in retail and wholesale profits happening at the same time. Unless retailers are making bumper sales to extra-terrestrials on a spending spree I am speechless on this paradox.

Thirdly, the contribution of wages to economic growth has gone down from 54 per cent in the first quarter of this year to 38 per cent in the second quarter. It is logical to assume that this leads to a decrease and not to an increase in consumption - unless consumers all of a sudden decide, simultaneously, to take out most of their savings and spend them. But this is unrealistic.

Fourthly, in July this year trade statistics published by NSO show a drop of 15 per cent in the importation of consumer goods and a drop of 0.8 per cent for the first seven months of this year. There can be no doubt that when one takes into account rising prices Maltese families have started to buy and consume less. How all these facts figure in the 22 per cent increase in profits in the retail and wholesale sectors is truly mind boggling. Unless the Maltese population exploded during the second quarter it is difficult to imagine that all of a sudden ordinary mortals have started consuming more than they usually do, as if they gave vent to their frustration and gluttoned after a long diet.

I’m very curious to see whether this momentum in retail and wholesale profits will maintain consistency. If third quarter readings will be in the same levels of first quarter results then something must have gone terribly wrong with the compilation of statistics of the second quarter. But if third quarter readings will more or less tally with second quarter readings then the GRTU and Eurostat must be getting it all wrong somewhere (which I doubt), not to mention the NSO’s own findings on wages and importation – unless, of course, the NSO fished up something in the retail and wholesale business that was never netted before, and instead of working the figures backwards merely propped up second quarter readings only.

From the first day that the Leader of the Opposition trusted me with this portfolio I have been eyeing NSO statistics more than ever before. I would like to put past controversies behind me and start a new leaf. But certain doubts still linger on my mind and for reasons I have transparently expressed in this column I think it is high time for clearer explanations.

The NSO must transmit confidence and credibility. It shouldn’t export uncertainties.

Dr Gulia is the

Opposition’s Main Spokesman

on the Economy and the

Self-Employed)