According to Eurostat and the National Statistics Office, real Gross Domestic Product (GDP) in Malta has grown at a very fast rate since 2013, faster than that of most EU member states.

It is important to note that around 50 per cent of incomes generated from GDP refer to wages and other compensations to employees. The remaining portion of income generated from local production includes self-employment income, profits, rents and interests.

Does this statistic mean that we should be happy with Malta’s economic situation?

A yes argument would hold that Malta’s economic growth encourages consumers to generate further income through purchase of goods, services and investment. In turn, this can help increase government revenue, mainly through income tax, VAT and excise tax. The government would then possibly be in a position to allocate more funds to improve citizens’ quality of life, for example through investment in infrastructure, social welfare and education.

A side effect of this is that as the GDP grows, the government will be allowed, according to the Stability and Growth Pact of the EU, to increase its actual amount in euros of budget deficit (the annual difference between government revenue and government expenditure) and debt (accumulated deficits over the years) without transgressing the permitted thresholds, namely three per cent of GDP for the annual budget deficit and 60 per cent of GDP for government debt.

As a matter of fact, government debt has increased substantially since 2013, but its ratio to GDP has decreased. Again, this should permit the government to increase expenditure to help improve people’s quality of life.

Malta’s economic situation will feature heavily in the upcoming general election

A no argument, on the other hand, would emphasise different factors. For example, is Malta’s economic growth sustainable? Is it really being translated into improvements in the overall quality of life of its citizens? And is the increase in GDP being redistributed in an equal way, or are some social categories benefitting much more than others?

The sustainability argument would argue that Malta is too reliant on sectors which can implode (such as construction), or sectors which are currently lucrative but which can quickly shift investment elsewhere (such as gaming). This argument would emphasise that apart from the sale of citizenship and the tax-payer-subsidised investments in energy, Malta has not really produced new economic sectors in the past years. It could be the case that Malta’s current model consequently gives primacy to electoral cycles.

The quality of life argument would highlight everyday experiences of citizens. These would include the large number of bad roads, dangerous pavements, traffic congestion, overdevelopment, environmental degradation, pollution, very poor enforcement on various inconveniences, increased noise pollution, and so forth.

The income distribution argument would emphasise that Malta is experiencing an increase in poverty. This may include both working and non-working poor people who are relatively poorer when one takes into consideration the increase in rents and costs of basic items such as foodstuffs. Indeed, there is no evidence that with the recent economic growth, poverty has decreased.

Undoubtedly, Malta’s economic situation will feature heavily in the upcoming general election.

But let us keep in mind that at the time of the last general election, Malta’s economy was doing relatively well and successfully endured the great global recession. But the Nationalist Party lost by a record margin. This suggests that a significant number of Labour voters gave importance to other factors apart from the state of the economy.

By ‘significant’ I am not referring to the majority of voters who would vote red or blue come rain or shine. I am referring to the thousands of voters who are more flexible and vote for one party or another – including small parties – for one or a myriad of reasons. These may include self-interest, one’s principles, specific issues, patronage, sympathy or antipathy towards party leaders, economic factors and governance.

In this regard, it is interesting to note that the recent Malta Today electoral survey shows that a significant number of persons are not stating their voting intentions. Besides, the younger generation tends to be less sure on voting preference when compared to other age groups. Do such voters give primacy to the economy?

Michael Briguglio is a sociologist.

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