Beating the odds

Despite a challenging global economic climate, Malta has seen remarkable economic and social gains in the two years following the March 2022 general election.

The past two years have certainly not been among the best years for families and businesses across the European Union. They have faced unprecedented economic shocks – including the biggest increase in the price of fuel and electricity ever observed, as well as the biggest interest rate hike on loans. These economic shocks, which came after a pandemic, and which were also accompanied by major impacts related to rising geopolitical tensions, led European economies to recover at such a very low rate that they nearly ended in recession. At the same time, governments were forced to adopt austerity policies that continued to lead to further difficulties among European families.

In contrast, over the past two years the Maltese economy has continued to achieve new successes. These economic and social successes were due to strategic decisions taken during Robert Abela’s first electoral mandate as Prime Minister following the March 2022 general election. In this article we will focus on five achievements since then, that have greatly benefited Maltese families and businesses.

1. The best economic growth among all EU countries in the last two years.

While the euro area economy is almost back in recession, a situation which the UK economy has also been hit with, the Maltese economy is growing at the highest rate observed among all EU countries. In fact, in the last two years Malta’s GDP has increased by 15%, while across the EU the economy grew by only 4%. Thus, Malta’s economic performance has been almost four times better than that of the countries around us. The biggest difference in economic performance was due to the strength of domestic demand in our country. This reflected the financial health of families, with official data showing that household deposits reached a record high of €17 billion. This is double the amount that was deposited in 2013.

2. The only country in Europe where fuel prices, electricity bills, and the interest rate on loans have remained stable.

Across Europe the last two years have brought huge burdens on people. The interest rate on loans increased by almost four and a half percentage points, which means an additional burden of €4,500 on every €100,000 of debt outstanding. A litre of petrol or diesel has exceeded two euros for a long time. Likewise, every unit of electricity in Europe was two and a half times the value charged in Malta. All this meant a severe erosion of the purchasing power of European households through government decisions. This did not happen in Malta, and Maltese families saved several thousand euros compared to European families. 

The government did not just protect households from external shocks; it went further. For instance, first time buyers started receiving a grant of €1,000 each year for ten years, while Government also introduced the additional cost-of-living mechanism that devoted almost €50 million to families most affected by inflation. In addition Government has made a deal with importers and supermarkets resulting in more than 400 food products falling in price through the ‘Stabbiltà’ scheme.

3. A record of job creation and the lowest unemployment rate among all EU countries.

While Malta had previously managed to have the lowest unemployment rate among euro area countries, it was only in the last two years that it had the lowest unemployment rate among all EU countries, as the unemployment rate in Malta fell below 2.5% for the first time in history. This resulted from a record of job creation, so much so that Malta had a much higher employment rate than the European average. In the last two years we have seen an increase of over 32,000 new full-time jobs in the private sector. This means that one in seven full-time employees in the private sector have found employment since the last election. Of this increase, 10,500 was of persons working in the professional and administrative services, and around 3,000 were in financial services and information and communication.

4. Almost two billion euros in Government capital investment – the largest sum ever invested in two years by a Maltese government.

When faced with an international economic crisis, the pre-2013 administration had chosen to reduce capital investment from 3.4% of GDP to 3% of GDP, so that Malta was investing below the euro area average. In contrast, in the past two years, public investment rose from an average of 3.3% of GDP to 4% of GDP. This is almost one percentage point more than what is being spent across the euro area. The main reasons underpinning this rise are a sharp increase in capital projects in the health sector, rising from €33 million to €81 million; investment in energy and environment, increased from €77 million to €213 million; as well as education, from €64 million to €92 million. Meanwhile, investment in infrastructure remained strong, at over €140 million.

5. The largest increase in pensions, children’s allowance, and minimum wage ever granted in history over two years.

In addition to a COLA increase of almost €23 per week, each pensioner got an additional €5 weekly increase, parents got a €6.50 weekly increase, and those on minimum wage took €8 more per week. This is in addition to the fact that these groups also benefited from the additional mechanism against inflation, which meant an increase of another €10 per week. These increases were the largest increases ever granted by the Government, leading to a record social spend of €1.5 billion.

Supported by this assistance, households in Malta continued to spend and consume, while bank deposits of the lowest-income households also increased sharply. The poorest families in the country now have the second highest amount of bank deposits among all EU countries.

Photo: Prime Minister Robert Abela, flanked by Cabinet members, speaking on the economic and social achievements since the March 2022 general election at a Press conference held at the Auberge de Castille yesterday.

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