Withstanding headwinds

As the economic situation across the continent goes from bad to worse, a comparison of the latest official data for the EU and for Malta shows a diametrically opposite situation.

Every month since the pandemic started, the EU’s statistical office, Eurostat, has been publishing a standard set of indicators to capture trends underpinning the recovery from that extreme shock.

This ‘European statitistical recovery dashboard’ is continuing to be compiled well after Covid has receded from public debate, as in many countries the situation is still far from what it used to be. Moreover, the additional shock from the wars that followed the pandemic has given this exercise even more importance as the situation across the continent is going from bad to worse.

In the latest edition, published on the 17th January, the title of the accompanying analysis was ‘EU industrial production, services output, and retail trade decrease amidst rising inflation’. In fact, Eurostat stated this was a “less optimistic picture for the EU” than in previous editions. EU economic sentiment “lags significantly behind pre-pandemic levels”.

If one compares the data for the EU and that for Malta, it is really a diametrically opposite situation. GDP growth is now 0% in the EU as against a healthy rate for Malta. Economic sentiment in Malta is well above its historical average while in the EU it is below. Unemployment in Malta is much less than half that in the rest of the Union, while the island’s employment rate is well above the EU average. The measure of labour market slack (the number of persons who would like to work but are not in a position to) for Malta is nearly a quarter that for the EU.

Industrial production in the EU is falling, while it is rising in Malta. The same is happening to retail trade. Export growth in the EU is relatively flat, while in Malta it is rising by 7.1%. The Government deficit in Malta is recovering strongly and is below the EU average, while Government debt is substantially below that of the rest of the union.

That an open economy such as Malta, which is so dependent on trade with its neighbours, is able to withstand such headwinds and continue growing strongly is testament to Malta’s economic policymaking skills. Not only has these skills shielded Maltese households and firms from external shocks, but they have ensured that they have a competitive advantage that is resulting in increased prosperity.

Economic sentiment95.6%103.6%
Unemployment rate5.9%2.5%
Employment rate75.3%83.8%
Labour market slack11.3%3.3%
Industrial production-0.2%1.8%
Retail trade-0.2%1.7%
Government deficit-2.6%-0.1%
Government debt83.1%50.7%

Photo: esfera/Shutterstock.com

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