The National Statistics Office announcement last week that the first quarter of the year saw a 3.1 per cent growth, following the recent NSO and Central Bank figure of last year’s growth as being in the 2.5 per cent region, should have made most Maltese happy.
This rate of growth is much better than that experienced over the past years and shows an upturn that has long been wished for, indeed foretold, but never realised.
All the other anecdotal evidence around us shows how resilient the Maltese economy is. One sees, and notes, further proof of people branching out into personal enterprise, such as shops or small contractors, but also other, less remarked upon, hi-tech enterprises with links to cutting edge technology out there in the big competitive world.
The business world had a very good year in 2005 after so much restructuring was done. And, of course, the country’s fiscal position both as regards deficit and debt, is now far better than it was three years ago. Foreign direct investment is flowing, together with more job opportunities and people, young people especially, have the luxury of moving from job to job, leaving their jobs certain that they will find something similar quite easily.
What is still lacking, despite all this, is the perception, out there in the country, that things have improved and a corner has been turned. The electricity surcharge, in particular, has heavily undermined earnings and is forcing families with one breadwinner below the poverty line, or at least into the situation where they cannot make much yearned for purchases. Think then of the elderly pensioners and those on social security.
It seems that Slovakia, which held its election yesterday, is experiencing the same kind of situation we have here: the economy is on the mend but the good news still has to filter down to the population at large.
It is also true that one cannot judge an economy simply by the growth or GDP figures. Although what was written in l-orizzont on Monday might not be true – that the GDP growth was fuelled by heavy government spending, which was not the case at all, it is equally true, as Robert Kennedy once wrote, that GDP includes air pollution, cigarette advertising, the keys and locks of houses and of prisons, the increased production of weapons and of missiles but does not take into account the happiness of families, the quality of education, the joy of games.
There is much to argue now for the government to ease up and open its hands, preferably now rather than in the next budget. The government, probably, gets to hear other voices.
Some would tell it to be prudent. Others would point out that Malta is very close to the borderline where inflation figures are involved, and Lithuania’s case teaches us that any slip-up on our part can easily lead to Malta being blocked from joining the euro on 1 January 2008, and this, whatever Labour says, would be a catastrophe for Malta.
Others will argue that the 3.1 growth figure can still improve and that it was gained in the face of much adverse publicity and negative feel-bad seeding, so the odds are it can only get better. And still others will argue that the economy may overheat, which will necessitate some hard corrective measures, such as even higher interest rates to cool down a spiralling consumer boom.
Last week this newspaper argued that the government can ease up fiscal pressure in one area – the departure tax, a source of anger and aggravation for those who like to travel. There are, of course, other areas open to allow the still small boom to be passed on to the population – cuts in income tax, cuts in the surcharge, more help in education and training.
It is urgent, however, for some decisions to be taken if the boom is to be nurtured and bloom, and certainly one of them is to allow the productive forces in the country fuller and freer rein to be able to produce further growth. Allowing the current restrictions to hamper greater growth would be hugely counter-productive.
Government must ease up, and in a way that impacts most on most of the people.