In his the book The Wealth of Nations, economist Adam Smith coined the famous concept of the invisible hand, a concept that has intrigued many governments.

It means an economy that is guided by an unseen mechanism working in the background which maintains equilibrium between the supply and demand of resources. Thus, the invisible hand functions by virtue of the innate inclination among free market participants to optimise the GDP growth which, in the end, benefits society at large.

Smith advocated a free market with minimum government intervention since, in his opinion, such regulatory action would slow down the recovery of markets. Simply put, one is advised to tone down the state influence, enter into more partnerships with the private sector and generally adopt a laissez-faire economic philosophy.

Once recovery starts, this rewards us with higher employment so consumers are able to spend more, a phenomenon supported by spending in capital projects. The aim of this article is to compare the stellar economic growth of three EU countries, namely Malta, Hungary and Poland.

Starting with Malta, it proudly registers a good economic track record marking an almost six per cent growth in GDP last year and enjoying very low unemployment levels. In recent years, the main driver of economic growth has been private consumption, resulting from a controlled increase in wages, high consumer trust and employment.

A recent evaluation by the International Monetary Fund  (IMF), carried out last May, made positive remarks on Malta's state of governance and fiscal transparency. The latter helps ensure that governments have an accurate picture of their finances when making economic decisions, including the costs and benefits of policy changes and potential risks to public finances.

Torben Hansen, deputy divisional chief of the IMF's Fiscal Affairs Department, remarked that Malta met the standard of good or advanced level practice in 21 of the 35 principles in the fiscal transparency code. The IMF recommended a number of refinements that are desirable in continuing to  improve fiscal transparency, particularly in connection with reports to the public sector and on tax expenditure.

Let us stop and contemplate the positive transformation of the economy which, up to 2012, was on the verge of being penalised by the Commission for exceeding the official three per cent of GDP deficit threshold. The situation recently improved, showing a 3.9 per cent of GDP surplus in 2017, which makes one ask whether Adam Smith's 'invisible hand' has been working on steroids.  

Enjoying a bumper period of growth can also be attributed to low inflation and borrowing costs, while the recovery of the euro has also been helpful for exports. One's imagination runs riot when witnessing the swift transformation of an economy which, only a few years ago, was running high public debt close to 73 per cent of GDP to one that in a short period of time has registered a surplus and is slowly repaying its debt. Gone are the days when the government used a policy of deficit financing spurred by a lax policy of "tax, borrow and spend".  

In the words of Adam Smith, one may be tempted to ask if the Castille administration is simply lucky or is it the 'invisible hand' that is quietly pulling the strings and priming the pump?  Who is advising Castille?  Is there a king-maker in the shadows, directing the Prime Minister and quietly administering the miraculous cure that is yielding such admirable growth?

Will the upturn and the glowing affluence reach its peak next year, or will the 'invisible hand' continue to work miracles and guide us to partake from the golden pot?  It is hard to say whether Malta is experiencing the traditional cycle of boom followed by bust. The Central Bank's latest reports state inter alia, that the party will go on unabated by external factors and hopefully the present cycle is sustainable. We will glow eternally in the sunshine.

It sounds too good to be true that the administration will succeed in flourishing, endlessly enjoying the sweetness of a never-ending jar of jam. In comparison, both Hungary and Poland are thriving under a glowing renaissance, with their economies running at full speed. A visitor returning to these countries after a few years away will find new highways, modernised buildings and a plethora of foreign investment. At the same time, low unemployment is boosting consumer confidence and domestic demand while, as in Malta, the continued flow of EU cohesion funds means money is still pouring into the region.

All three countries report low unemployment, which is now becoming a problem. Typically, a high demand for staff in Hungary and an exodus of workers to Western Europe is making recruitment hard for some companies. Locals complain of having to wait six months just to have an apartment painted.

A similar situation prevails in Malta. The latest economic growth figures have put Hungary back in Europe's leader circle. Reports show that this extra revenue did not result from privatisations or taking out loans, but it is one of the most important indicators that the economic reforms of the third Orbán Government are working. It is remarkable how the 'invisible hand' has helped to create more than 700,000 jobs, while taxes on payroll and business profits have been significantly reduced.

Hungary is seeing new investment records, partly as a result of a good measure of fiscal discipline. As is the case in Malta, this translates into low budget deficits and sustainable growth. All these indicators paint a picture of a Hungarian economy finally stabilising on its own two feet. In the first decade of the 21st century, Hungary's economic growth was driven by loans, which left the economy precariously exposed to the 2008 global crisis. As a consequence, it had to avert bankruptcy by taking an IMF emergency bail-out. But today, GDP growth flows steadily from a growing trade surplus and higher FDI, which indicate a fundamental turnaround in the structure of the Hungarian economy.

The 'invisible hand' theory places Hungary among Europe's top performers. Taking Poland's situation, it has avoided a shortage of workers by importing labour, primarily from Ukraine. Poland is seen as the EU's most promising pupil in central and eastern Europe, enjoying transformative economic growth. It expects growth of 4.5 per cent in 2018, up 0.1 percentage points from last month's forecast and 3.5 per cent in 2019, which compares well with Malta's performance. The next Polish budget is innovative and includes several social spending initiatives, including the government's €500-plus child benefit scheme, while better tax collection should help buttress revenues. In addition, recent media reports have suggested that the government may introduce an exit tax on assets moved abroad in order to bolster finances.  

In conclusion, all three countries have performed remarkably well since they joined the EU family. It is to be hoped that they will continue to grow and prosper and that, with the help of the ubiquitous 'invisible hand', they can sail gloriously into the future.

The writer is a partner in PKF, an audit and business advisory firm.