Small island economies face significant challenges when they try to reduce their dependence on one or two main economic activities. Still, the quest for new activities is crucial when circumstances change and traditional ways of creating growth show signs of decline.

A State of the Nation survey has revealed the perceptions of those participating on the importance of various economic activities for the country’s well-being. Not surprisingly, many believe that tourism is a crucial plank of our economy.

However, a simplistic comment on the importance of this economic activity is by no means a vote of confidence in how the industry is managed.

The policymakers keep ignoring the risks of overtourism, which, in the long term, will confirm the perception of many visitors that the country has lost its appeal as a typical Mediterranean island that offers a unique experience to visitors.

The main, if not only, performance indicators that policymakers keep flaunting are the ever-increasing number of people visiting the island and the gross amount of money they spend here.

Tourism operators and policymakers seem content with reaping the low-hanging fruit of an industry increasingly fuelled by low-cost travel and cheap rented accommodation.

There is a better way of putting our tourism industry on a sounder basis, giving better added value to the economy. It is time for the Malta Tourism Authority to start publishing the results of the analysis of the costs and benefits of our tourism industry, as well as the net added value.

Another perception that needs scrutinising is the real importance of the retail and wholesale industry in the Maltese economy. Judging by the number of retail outlets in every town and village, survey respondents seem to believe there is no risk in being a nation of shopkeepers. For instance, do we really need so many fast-food establishments?

People are increasingly convinced that the construction boom has gone too far. But policymakers seem to have no real commitment to stop economic activities that depend mainly on low-skilled, low-paid imported labour.

We may already be in a vicious circle where more imported labour creates more demand for often low-standard accommodation that, at times, infringes on the little countryside that is left.

Finance Minister Clyde Caruana is one of the few voices in government that understands the risk of overinvestment in the construction industry. Still, Prime Minister Robert Abela has, so far, shown little leadership qualities to spell out the new economic activities we should be aiming for and the hard work that needs to be done, especially in the education sector, to have a reasonable chance of achieving them.

The financial services, film and gaming industries have had varying degrees of success because of our tax-friendly legislation. However, tax competitiveness is increasingly being challenged by the more prominent member states in the EU as it is perceived to be unfair to the larger states. Ways must be found to make our financial services industry more attractive because of investment in high-end technology and highly skilled labour rather than just improved profitability through low taxation.

While, at a time of high economic growth, it is expected that many will be satisfied with their financial situation, the cost of running our economic engines to full capacity must not be ignored. At last, the prime minister is speaking about the importance of people’s well-being as distinct from just a standard of living.

The economic activities that will deliver the quality of life many desire may still have to be discovered.