Malta, it is an undisputed fact, has descended into a recession according to the traditional definition of a recession − two consecutive quarters of negative economic growth. And Malta’s economy has shrunk by 0.3 per cent in the fourth quarter of last year and the first quarter of 2012.

It is also a fact that numbers do not lie, but when they are used selectively they do not always give the full picture.

The government’s explanation, in simple terms, that the decline in the country’s gross domestic product registered over the last six months on record boils down to its absorption of energy production price hikes and lower exports levels registered by one particular industrial concern, namely STMicroelectronics, the country’s largest.

This explanation, however valid it might be, may show that economic activity across the board is not dwindling as much as it seems to be on paper. But it also shows the danger of having so many eggs in one manufacturing basket as well as raising questions about the wisdom of having frozen electricity tariffs for as long as it has, although the argument of maintaining consumer spending may have some non-political validity in this latter context. It should also be noted that the finance ministry itself has said that nominal growth would have been at 2.4 per cent had the government not decided to freeze utility bills, since Enemalta’s losses and subsidies have a direct impact on the calculation of GDP.

The Opposition for its part warned that the government’s increase in national debt has left it very little room for manoeuvre to deal with a recession, and accused the government of having no contingency plan. It also pointed out how consumer and household spending had fallen by 4.5 per cent in the first quarter of the year while at the same time government expenditure had increased by 10 per cent.

The government, on its part, argues that jobs have been and are still being created. It cites unemployment, at below six per cent, as being relatively low as well as the fact that real wages have increased by four per cent – thanks, it says, to its incentives for industry to invest and expand and, as a result, increase the size of their employment ledgers. Would businesses have been hiring and increasing wages if we have been in recession over the last six months, it asks.

It also notes how the International Labour Organisation recently found that Malta was among six countries within the world’s most advanced economies category that had managed to actually increase jobs, and the government claims that 20,000 jobs have been created over the last four years.

The definition of a recession that we go by, two consecutive quarters of negative growth may be somewhat simplistic in today’s extremely complicated economic scenario, and, as such, it would be interesting to have the economy gauged on another, perhaps more precise, set of data.

In the United States, for example, the National Bureau of Economic Research, the country’s recession ‘authority’, defines an economic recession as “a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales”. It uses that multifaceted yardstick to precisely date the beginning and the end of recessions.

Going by that checklist, Malta is succeeding is some areas but is failing in others.

For example, that there has been a decline in real GDP over the last few months is evident from the raw figures but whether that decline – a total of 1.3 per cent over six months – is considered ‘significant’ or not is another question.

Real income, according to the government, has increased by four per cent, as has employment. Setting aside the one particular industrial concern that, according to the government, dragged the country’s GDP down, industrial production is not exactly thriving but it is surviving and, by default, so are wholesale activities by Maltese enterprises.

As far as retail sales are concerned, however, Malta saw the third-largest decline in Europe over the past year, of 4.6 per cent, according to figures published this week – placing just behind the decreases in Spain and Portugal, and this matches with the 4.5 per cent decline in consumer spending cited by the Opposition.

We do not mean to say here that the country is sailing smoothly through Europe’s troubled economic waters, what we mean is that we must read between the lines on the spreadsheets and not leap to conclusions that may, at the end of the day, prove to exacerbate an already concerning situation.

It is often the mere talk of a recession that sparks a real recession, and headlines such as we had in the press yesterday, some of which appeared to take delight in the news of a recession as they had when credit agencies downgraded Malta’s sovereign ratings, does the country no service other than to create the kind of panic that could at the end of the day create a much more serious recession than the one we are in. If, based on the fear factor catalysed by a recession, businesses stop hiring, cut back on wages and when consumer spending falls even further, that is when the downward spiral will begin in earnest and when we will find ourselves in real trouble – just ask anyone in Spain, Greece or Portugal.