There was some good news for Europe last week.

After more than one year of economic gloom, people are slowly going back to the shops and venturing back in the housing market. The number of jobs being lost is decreasing too.

Europe’s two biggest economies, Germany and France, each saw growth of 0.3 per cent from the previous three-month period, surprising analysts’ expectations for equivalent declines and technically ending their worst recession in decades.

The French and German increases marked a stunning turnaround from the previous quarter, when Germany shrank by a massive 3.5 per cent and France contracted by 1.3 per cent.

The unexpected increases in Germany and France meant that the 16-country euro area contracted at a sharply reduced rate of 0.1 per cent, much less than the 0.5 per cent anticipated in the markets.

Though the euro zone drop was the fifth straight quarterly decline, it was a marked improvement on the record 2.5 per cent fall recorded in the first quarter and was even better than the 0.3 per cent quarterly decline recorded in the US, the world’s single largest economy.

Of course, this does not mean that the problems are over. Central banks and leading economists have expressed caution, saying that over-confidence might lead to a possibly more damaging “double-dip” recession.

Still, stock markets have risen and many recession-weary consumers appear to be focusing on reports showing that access to credit is improving and the rate of job cutting is slowing in Britain, while business confidence rose in France.

Economists also stressed that the road to recovery will not be straightforward – especially as much of the improvement in Germany and France was due to very sharp falls in imports, which reduced trade deficits and lessened the GDP reduction stemming from the net trade balance.

And, while Germany and France saw output rise in the second quarter, other euro zone countries remain mired in recession, including Italy, which saw GDP fall another 0.5 per cent, and the Netherlands, where GDP dropped 0.9 per cent.

Not all is rosy, but it could be that the worst is over. After all, it was anticipated that after the bottom would have been scraped at the start of the year, there would be a slow recovery, and that by the end of this year or early the next the wheel would have completed its turn.

Having said this, the economy is still fragile and it would be wrong to assume that things are back to what they were before the recession hit worldwide. In Malta, where the effects were felt a little bit later than continental Europe, it might take us a little bit longer to re-emerge from the dark tunnel.

We must be prepared, because we cannot afford to lose more ground while other countries are recovering. In a globalised world where competition is tough, Malta cannot lag behind because a small country like ours then finds it even harder than others to navigate upstream.

As is well-known, much of our strength lies in the tourism industry, which has been negatively affected by the recession – it is understandable that when people spend less, the first to be cut off the list is a holiday abroad.

In fact, tourism figures have been low this year and the trend is not expected to pick up much, so much so that a substantial drop in the number of tourists is expected during 2009.

As a country, we were not as badly affected by the global recession as other countries were, and this was to our advantage. But this could also mean that the effects of the turnaround would take longer to be felt here. This is why we must be prepared to shift into gear as quickly as possible.