Malta’s economy in 2009 shrunk by 3.4 per cent, not two per cent as was originally reported by the National Statistics Office, according to Labour MEP Edward Scicluna.

Prof. Scicluna said revised NSO figures showed that Malta was worse hit by the 2008 global financial crisis than initially believed, although the contraction was still healthier than the 4.1 per cent EU average. “All the hype about Malta having avoided the impact of the (economic) crisis is just that, hype. The Prime Minister should stop singing from an outdated script,” he said.

Reacting to credit rating agency Moody’s decision to downgrade Malta’s bond rating last week, Prime Minister Lawrence Gonzi said on Friday that the best way Malta’s economy could react was to keep doing “what we have been doing”. However, he added that other countries’ financial and political insecurity were taking their toll.

Prof. Scicluna said the original two per cent figure was revised by the NSO once it received updated data. It is standard practice for such GDP figures to be revised and adjusted. He said a EU Commission forecast noted a strong rebound in 2010, with GDP growth of 3.7 per cent driven by a significant rise in the export of goods.

Growth this year (2011) was predicted to slow considerably, to two per cent, with much of the growth attributable to a “significant expansion in public investment” which was likely to slow down considerably in 2012.

The forecast, he said, spoke of “very low consumer confidence” and predicted this would have a knock-on effect on private consumption. It also sounded a word of caution with regard to Malta’s external deficit. Unfavourable terms-of-trade developments, it stated were likely to worsen Malta’s external balance. The general government deficit would continue to narrow, from 3.6 per cent of GDP in 2010 to three per cent in 2011, the forecast predicts.

However, it notes that approximately two-thirds of this decline will be due to the expiry of temporary measures adopted in the 2010 budget. Air Malta’s upcoming restructuring, it suggests, may entail further government expenditure and push both deficit and debt projections upwards.