OPINION – Re-structuring

Last month, the Statistics and Census Service (DSEC) published data on the economy that did not get as much attention as it probably deserved. We mean the ‘national’ accounts according to the Gross Added Value (GAV) contributed by the various economic sectors for 2020 – the year when it all started to unravel. 

Those figures provide a sort of X-Ray of the economy’s structure and, consequently, the various sectors’ relative weight in the creation of the local wealth. Some of the results are pretty striking, but none more so than the contribution of gambling to overall income in 2020: just 21 percent. It is a tremendous contrast with the same value in the previous year, 51 percent. In 2020, the share of the leading sector dropped to less than half of what it was before. 

That is the outcome measured in relative terms.  It is sort of ‘moderated’ by the fact that the economy itself contracted. In absolute figures, the sector GAV tanked to less than one-fifth its size in 2019. Alone, the sector losses represent three-quarters of the overall economic shrinkage in that year. The economy went down to slightly less than half the size it had the year before. Hotels and restaurants, significant bellwethers of the local economic health, also suffered substantial reductions in size by 80 percent and 54 percent, respectively.  

Almost all other sectors contracted in absolute size. However, three activities stand in stark contrast with the overall picture. Banks, public administration, and education rose against the tide in 2020. The latter two went up by small amounts, changes not much different from what one would expect in regular times; the former surged by an astonishing 15 percent. Banks were propelled with a two-digit growth rate while the economy was falling to less than half its size in 2019.

On the face of these figures, one might say that economic diversification was already in full motion. The top 5 sectors’ combined share dropped by about 15 percentage points.  Real estate kept the second position but doubled its share to almost 18 percent of the economy, and banks more than doubled it, rising to the third spot, with a 13 percent share.

Unfortunately, that is not necessarily good news. The apparent economic re-structuring is mainly the outcome of general impoverishment at variable sectoral rates, not the product of vigorous emerging activities. We’ll have to wait another year to find out what 2021 brings about.