The prowess or weakness of the economic performance achieved during the tenure of any particular government and how it compares to other administrations gets touted or berated to justify political arguments, but more often than not is actually used to reinforce one’s preconceived notions.
The current’s administration economic achievements are to evaluate especially on the eve of an election.
People’s memory can be very selective and tends to skew according to a person’s personal perspective or the interest of those who are supposed to spread information. At Malta Unrepentant we decided to actually look at the numbers.
There are several factors that can be used to judge a country’s economic performance, in our analysis we decided to start from the most significant ones. First we will have a look at the GDP growth rate (in real terms). However, we will also analyse them within the context of the International economic environment by comparing Malta’s results with those of the World and EU (28)
We have dug up the yearly GDP growth rate (in real terms) for every year from 1971 to 2015 from the World Bank database, and we added the data for 2016 from the World bank estimates. We grouped this data by parliamentary term and found the average growth rate for each Maltese legislature. We also retrieved the same data and carried out the same exercise for the growth rate achieved by the EU28 and World economy as a whole.
GDP Growth Rate (in real terms)
The following table shows the average year on year GDP growth rate (in real terms) enjoyed by the World, Malta and the EU28 grouped by the (full-)years that have made up a parliamentary term in Malta. With regards to election years we took a very straight forward approach of grouping that full year with the legislature that was in power for the majority of the year. Election years during which the election was held before the 30th of June were grouped with the incoming tenure, while those years when the election was held after the 30th of June were grouped with the incumbent administration.
|GDP growth rate (real terms)|
The data, which is also illustrated in the chart below shows that Malta enjoyed the fastest economic growth (in real terms) during the two Mintoff led governments of the 1970s (9.8% and 8.8%) while the first Fenech Adami led government (with a 6.7% growth rate) places in third place. On the other hand the 1982-1986 Mintoff/Mifsud Bonnici and the last Gonzi (2008-2012) led administrations scored the lowest, both at 1.8%.
With an average economic growth of almost 4.8% the legislature that just ended easily outperforms the results obtained in the previous 14 years. This growth also almost matches that enjoyed during the second Fenech Adami (1992-1996) and Sant (1997-1998) administrations, which achieved 5.0% and 5.2% respectively.
Comparison to the International Economic Climate
The above table and chart show Malta GDP growth alongside that obtained by the World and the EU28, as it is also important to view these results in the context of the International economic climate in which they were obtained. To facilitate this analysis the following table shows the net difference between the growth rate achieved by the Maltese economy and the rate attained by World and EU28 economies respectively.
|Malta’s Net Over-performance|
During the 1970s administrations Malta’s economy outperformed the rest of the world by 5.7p.p. (percentage points) and 5.6p.p. and the EU28 by 6.4p.p. and 6.5%p.p.. This decade registered the best results followed by the 1987-1991 legislature, which overperformed the World by 3.4p.p. and the EU28 by 3.6p.p. in third place.
The worst under-performance compared to the World economy was registered during the 2003-2007 term, during which Malta joined the EU. The 1982-1986 period, which was characterised by political instability, marked the worst under performance compared to the EU28. These two legislatures also scored as second worst in the category in which they are not the worst. 2008-2012 was the third worst compared to the world average. and forth worst compared to the EU28. 1999-2002 was the third worst compared to the EU28. and forth worst compared to the world average.
The economic growth obtained during the outgoing 2013-2016 legislature outperforms both the World and EU28 by a higher margin than any of the three previous parliamentary terms under any front. The over-performance over the World growth (at 2p.p.) is slightly shy of that obtained during the 1997-1998 term while that compared to the EU (3.3p.p.) is the forth highest, barely below the 1987-1991 legislature (3.6p.p.).
It is to be noted that both when it comes to Malta’s raw GDP growth (in real terms) and how this fares against the results obtained by the selected International benchmarks, the best 3 performers are all within the group of the earliest 4 terms for the time period under review. On the other hand 3 of the 4 worst performers are among the last 4 legislatures This indicates that the Maltese economy has been steadily losing steam for, possibly, the last 40 years.
Within this context the economic growth obtained during the last few years (2013-2016) come as a breath of fresh air. This performance seems to be in line with was being achieved during the early to mid 1990s and provides a glimmer of hope that the Maltese economy might be gearing up for a resurgence. This optimism is further compounded by positive outlooks published by credit rating agencies and the European Commission forecasting strong economic growth for the years to come.
Maybe Malta is really on the verge of experiencing an Economic Miracle, but verifying this claim requires more evidence. Malta Unrepentant will further investigate the significance of the current economic performance with an analysis of Malta’s fiscal by legislature.
Note: by EU28 we do mean the 28 countries (or their predecessors) that, as of 2017, are currently members of the European Union, whether they were members of the EU back then or not…or at least that’s what the World bank “told” us :p