Faltering demand in Germany saw the recession across the 17-member eurozone deepen as it entered a third consecutive quarter.

Malta is still doing relatively well, but Eurostat statistics released yesterday show that the eurozone economy shrank by 0.6 % in the final quarter of 2012 from the previous three-month period. The decline was bigger than the 0.4 % drop expected in markets and represented the biggest fall since the first quarter of 2009 when the global economy was in its deepest recession since World War II.

The eurozone has now contracted for three straight quarters — a recession is officially defined as two quarters of negative growth. But it is not alone in struggling. Japan in recession too and the US economy has shown signs of faltering, with its economy flat in the final quarter of 2012, according to Eurostat.

The worry for European policymakers is that it's not just the supposedly weaker debt-laden economies such as Greece and Spain that are posting declines in output. Germany, Europe's biggest economy, shrank by a quarterly rate of 0.6 % in the fourth quarter as demand for its exports fell. France, Europe's second-biggest economy, also saw output drop by 0.3 %.

In total, the Eurostat figures show that seven euro countries are in recession — Greece, Spain, Italy, Cyprus, the Netherlands, Portugal and Finland.

There are hopes though that the fourth quarter of 2012 will mark the low point for the eurozone. In the first few weeks of 2013, there have been some indications that the eurozone may be over the worst.

However, the increase in value of the euro on the world's foreign exchange markets will not make life easy for any of the eurozone's exporters, as it potentially makes their products less competitive in the international marketplace.

Despite the ongoing election campaign, the feeling here in Malta is that business activity has not really slowed down. Businesses say that while they experienced a drop in demand and consumption in January, this is nothing out of the ordinary and is experienced every year. They also say that in the past, the economy often faltered during election campaigns, but people are still spending this time around.

Malta’s economy is one of the few in the eurozone that is experiencing positive growth – and that is the key. Some countries have seen outright contraction of their economic output – Greece and Spain are just a couple of examples. Others are seeing slight growth – but below par and below previous figures. Others have flat lined. But Malta remains one of the few countries where positive growth is being registered. The Prime Minister believes that with care and attention, the deficit can be brought to below 3 % - which is deemed sustainable. He also believes that Malta can balance its budget – something essential if long-term sovereign debt is to be brought to below 60% of GDP.

What is for certain is that whichever party gets into government, they must watch the pennies. Malta’s economy has changed drastically, particularly over the past five to eight years. It has seen major restructuring and redundancies. But in contrast, it has seen huge amounts of direct foreign investment that has translated into new jobs. And that is key. It is useless to keep churning out graduates, if there is nowhere for them to work. Would we really want a situation like Spain’s with 60% youth unemployment rates and brain drain, the likes of which have never been seen before in Europe? No.