The table accompanying Noel Grima’s report (TMID, 14 May) about the Maltese economy, plus analysis, provide concern about the real state of Malta’s economy.

It is not my intention to deal with all the statistics released by the NSO in March 2011 and featuring in that table, but only some of them, but worrisome they are nevertheless.The top line in the table, that about Malta’s GDP record between 1992 and 2012 (the last year no doubt being an estimate), and so over a period of two decades, suggests that overall GDP average percentage annual growth over that period has been of only around an annual 1.6%. With a low of 2.0% in 2011 (for well-known reasons), and a high of 5.3% in 2008 (that often billed as having been a “record” year!), this low average over 20 years cannot not be regarded as a very, very poor prolonged performance, and certainly far, far below what some say is the level of a regular (i.e. extended over the cycle) rate of 4.5 to 5% that is absolutely needed for the economy to be considered as performing at a level that can assume full utilisation of national assets.

I contend that it is both fallacious and certainly no consolation to follow the current popular trend of indulging in regular reference to EU averages for assessing Malta’s performance on this and other economic variables. Averages are known for their notoriety as being no comparison of like with like. And apart from perpetuating a peripheralisation attitude of “the small insignificant and unimportant outlier economies,” they induce continued acceptance of a status quo, and in the process ignore the truth that the economy needs to grow at a much, much faster and bigger rate than it has done over the past two decades, EU membership or not. Ours is an economy which, even if it were to be conceded that some growth in it has occurred, is simply not growing enough, let alone fast enough.

Let me now move on to other figures in that table. Private consumption growth as a percentage of GDP over the 2007 to 2012 period suggests an average annual growth rate of only 0.8%. This is poor, and underlines the simple obvious truth that private resources (bluntly put, money in people’s pockets for spending) are hardly growing at a rate that can keep up with inflation. With the economy clearly not creating enough jobs over the period, as evidenced by a practically unchanging unemployment level of circa 6.6% over this period, then private consumption couldn’t have been expected to do much better.

Over the same six years public consumption as a percentage of GDP grew at an annual average rate of 2.3%. But this figure is very much pumped up by the fact that in 2008 public consumption was at 12.1% and eliminating just that year’s figure then gives us, here too, a paltry 0.7% growth over a five-year period. And, again, if that’s not worrying, then what is?

There is a a widely swinging curve illustrating the 2007 to 2012 figures for annual percentage growth rate of Gross Fixed Capital Formation as a percentage of GDP. The annual change rates, from a high of 11% in 2011 (clearly evidencing some efforts at recovering from the ubiquitously very bad 2009/10) to as low a change as -25.3% in 2008 – here these too work out at an average of just 2.6% of increased fixed capital formation over the period... again very poor for what Malta really needs.

Malta’s trade balance although, inevitably, always a negative figure has held consistently over the past two decades. At an average annual level of around 10.6% of GDP that is a feather in our national economic cap, There is more that can be read into that. If visible trade – international market problems and all – can be held consistent, doesn’t it suggest that there lies an economic activity area that must be supported and encouraged much more than the oft-trumpeted TBCFS model (tourism, building and construction, and financial services). My colleague Lino Briguglio has, after all, more than amply shown in his recent publication on the macroeconomics of the Maltese economy, that the often vaunted positive multipliers of these sectors are certainly not as high as they are often asserted to be by many who work in those sectors.

The leader of the Italian Democratic Party, Pier Luigi Bersani, consistently says that “una economia che non cresce fa male a tutti” – an economy that is not growing is bad for everyone. There shouldn’t be much arguing about that...

Dr John Consiglio lectures on International Economics at The University of Malta