first of all in a reassessment of the dataset, which now comprises more timely series, a larger amount of international data and is subject to close monitoring every month, to ensure the indicator is always based on the best available data. secondly, a new method of extracting the common relevant information from the data has been used. this will become clearer when i briefly describe the ideas underlying this aggregate indicator, which attempts to synthesize the information contained in about 200 elementary series. for a detailed description of the methods used, the tests conducted and the results obtained, i refer to the recent paper by filippo altissimo, riccardo cristadoro, mario forni, marco lippi and giovanni veronese, “ new eurocoin : tracking economic growth in real time ” ( cepr, discussion paper no. 5633, april 2006, revised june 2007, and banca d ’ italia, temi di discussione no. 631, june 2007 ). together with lucrezia reichlin, i wish to thank these economists for having devoted so much of their time and knowledge to this project. we can conclude this introduction by noting that € - coin appears to track the underlying trend cycle movements of gdp growth in the euro area remarkably well. but more on this later. 2. 1 monitoring the economy : gdp let us now turn to what inspired and motivated the construction of € - coin. ideally, we would like to assess the state of the economy and its outlook using gdp growth, the most comprehensive measure of economic activity. however : i ) gdp is published only quarterly and with a rather long delay ; ii ) it is subject to revisions ; iii ) most importantly, it is affected by measurement errors and substantial short - run volatility. these factors reduce the potential of gdp releases for gauging the current situation. in fact, i would argue that for short - run policy analysis and decision we are often especially interested in “ signal extraction ”, that is in removing the “ noise ” from an estimate of the underlying conditions of the economy. we know that the first quarterly gdp releases are always provisional and that at times important revisions are in order. and, at times, a preliminary but timely and sufficiently robust estimate of what is known as the “ trend - cycle ” component of the aggregate measure may be especially useful. 2. 2 monitoring the economy : higher frequency data of course, we do not rely solely on gdp. our economic outlook is constantly

economic base, from an economy driven mainly by export - oriented manufacturing industry to one characterised by the increasing importance of export - oriented services. it also engaged in structural reforms to increase competition in key markets and to encourage labour market participation. malta now enjoys rapid growth, full employment and moderate inflation. the latest economic forecast by the european commission, that of winter 2017, shows that malta ’ s economy is expected to remain on a sustained positive trajectory. according to the commission : “ malta ’ s economic growth has settled down from the exceptional levels of 2014 and 2015 but is forecast to remain well above the eu average. unemployment is set to remain at record lows while productivity gains contain unit labour costs and preserve competitiveness. ” malta ’ s real gdp growth is estimated to remain robust. for both 2017 and 2018, the maltese economy is estimated to expand at the rate of 3. 7 %. this places malta amongst the top performers in the eu. during 2017, gdp in the euro area and the eu is expected to grow at the rate of 1. 6 % and 1. 8 % respectively. for 2018 growth in the euro area is expected to increase to 1. 8 % whilst average growth in the eu will remain as in the previous year ( 1. 8 % ). malta ’ s historical low unemployment rates are envisaged to be maintained over the coming period. the ec forecast shows that both for 2017 and 2018, malta ’ s unemployment rate will be 4. 9 %, which is extremely low when compared to the both the euro area and the eu. during 2017, it is expected that unemployment in the euro area and the eu will be 9. 6 % and 8. 1 % respectively. for 2018, unemployment in the euro area is expected to go down to 9. 1 % whilst that in the eu will also decline to 7. 8 %. malta ’ s general government deficit as a percentage of gdp is also expected to continue on the positive trajectory it has embarked on the in the previous years. it is expected to narrow further to 0. 6 % in 2017 and remain at this level in 2018. this figure is also compares favourably to the average deficit ratios projected in the euro area19 ( 2017 and 2018 : - 1. 4 % ) and the eu ( 2017 : = - 1. 7 % and 2018 = - 1. 6 % ). for the first time in many years, malta ’ s gross government debt to gdp is expected to fall below the 60 % threshold.