It’s either that the people upholding the government do not know economics, or else they are spinning.

For to propound that Malta’s economy is now growing strong, as the Prime Minister did in his Budget Speech when he said the Maltese economy had grown by 2.6 per cent in real terms, a growth rate that has doubled over last year’s growth rate, without analysing what fuelled the growth and what is the consequence of such growth patterns, is very, very short-sighted.

First of all, such bland, optimistic and feel-good-factor rhetoric does not look closely at what is fuelling Malta’s current growth rates.

At least, this time around, it cannot be said the GDP growth rates are fuelled by government expenditure, since the government’s deficit targets are being strictly adhered to.

Even so, however, the current growth rate is being fuelled by two key factors: ST and the

construction industry.

ST, fortunately for us, has turned around the slump in orders it has experienced in recent years and has now re-obtained a good value added rate. Yet ST is only part of one manufacturing sector and one cannot really say it has a multiplier effect.

The construction sector is going strong too, both with current workloads and more in the pipeline. But this sector too has its faultlines: there is a marked lack of labour supply and all this building is creating massive environmental problems.

Basically, this growth in these two sectors is exactly that: growth in just two sectors. And sectors with a low multiplier effect, at that. A one per cent growth in tourism, for instance, would have a far better multiplier effect than a three per cent growth in manufacturing.

Which, then, would explain why, despite all the hype being employed, more than half the respondents to a survey carried last week in The Sunday Times do not believe the economy is getting stronger. They are still not seeing the impact of a stronger economy. Any growth there has been has still not filtered down to them.

Rather than constituting good news for the government, this is actually very bad news. The more the government’s media hypes up the economy getting better, the keener will people feel they are not getting better and the more they will feel the shock of oil prices and the other oil-price-induced multiplier effects. In the end, once again, the government’s feel-good statistics will not be believed and people will prefer to judge by what they see going into their pockets.

After all, the Mario Vassallo survey showed that the income tax relief given by the Budget was very coolly received and that as many as 80 per cent do not consider the cost of living adjustment to be enough.

Nor does it seem wise for the government to compare Malta’s growth rate with that of the EU-25 or with that of EU giants such as Germany. Our real comparison should be with the East European countries who entered the EU with us and who still enjoy double our growth rate.

These countries have taken a far different strategic direction than we did. Instead of rushing to join the euro at the first possible opportunity, they have preferred to focus on growth by tackling the infrastructural problems first, even at the cost of higher budget deficits, and get to the euro later.

This paper has always been in favour of Malta joining the eurozone as soon as possible because we perceive the advantages of joining the euro as far outweighing the disadvantages, but this does not mean that an alternative path would not have seen us attain a higher growth pattern.

The conclusion is still the same: Malta must have (and can have) a higher growth rate for the people to perceive they are doing well. Harping on about a growth rate when almost nobody feels any personal change can be very counterproductive. And instead of staying up there trying to blow the trumpet of a growth nobody is feeling, the government would do far better were it to come down here and remove all the obstacles, all the knots, that actually hinder growth. It may possibly find it is the greatest disincentive to growth around.