Notwithstanding the introduction of the euro Malta’s external trade performance has remained an important economic indicator. Our competitiveness, or lack of it, is shown in the country’s balance of payments, particularly in the “goods and services account” where Malta’s imports and exports are registered. I would say that today this is the most significant indicator of our competitiveness, more so in comparison with other countries which have adopted the euro as their currency, now that the rate of exchange is no longer a relevant factor.

The last figures published by the National Statistics Office on the balance of payments indicate some very negative trends. They clearly show that in the last couple of months the current account in the balance of payments has been registering a very heavy deficit. In the second quarter we had dismal results and the latest figures relating to August show that the trend is not letting up, notwithstanding seasonal fluctuations and effects produced primarily by tourism.

In the first half of this year the deficit in the current account widened by more than e73 million, an increase of over 50 per cent on the first half of 2007. The increase in the deficit is mainly due to the great divide between exports and imports with the trade gap widening by e160 million or 40 per cent. Indeed exports plummeted by e106 million in the first half. And although importation increased by e53 million this was not due to an increase in the purchase of machinery for investment but rather because of high international prices of energy and food.

On the positive side exports in the services sector has continued to rise by e66 million. This was mainly due to profits made from online gaming (the industry is run by foreign companies so the profits fly out) and from transport services. But in the more important tourist industry profits fell by e2 million in spite of increases in new arrivals.

The bottom line is that our competitiveness is eroding with the deficit widening from e38 million in the first half of 2007 to a staggering e161 million in the same period of 2008. These results are logically impacting on our GDP. Indeed the deficit in the balance of payments has increased from 1.5 per cent to six per cent of GDP. The main cause of concern is our exports, which are relentlessly falling.

Finally it is worth observing that direct foreign investment plunged by 40 per cent in the first half of 2008.

The two Tonios from Birkirkara have been trying their best to portray a very rosy picture of the current state of the Maltese economy. Minister Fenech on the one hand insists that the economy is resilient in the face of the adverse international situation while on the other Minister Borg, making a rather unusual incursion in the field of economics, in a recent interview on the Nationalist daily, was happy to suggest that the economy is producing new jobs.

I wonder why they never refer to NSO statistics on international trade to back their claims. Indeed although some of our exports are being affected by ailing economies abroad which have admittedly weakened demand, on the other hand Malta, compared to other EU member states, is the worst performing country in the whole of the EU on exports.

Should not the international crises hit us all in the same way? And about the job creation argument I would advise Dr Borg to wait a bit longer as employers normally measure the depth of the slowdown before they start laying off workers with redundancies. A good look at what Farsons will be doing with its labour force soon will show him what I mean.

The sooner this government comes to terms with the fact that there are not only temporary external pressures but also internal structural problems with our economy the better.

The principal problem is that the government is not attracting enough investment in the manufacture and services sectors to make up for losses incurred in other sectors that are passing through temporary difficult times either because of the economic cycle or because they have structurally lost competitiveness with other countries. Indeed the creation of jobs the government is lauding itself with so much is not helping to improve our dismal balance of payments.

The government should stop babbling and start acting.

Dr Gulia is the Opposition’s Main Spokesman on the Economy and the Self-Employed