The World Economic Outlook report by the International Monetary Fund report is serious stuff. It calls a spade by its name and does not make for pleasant reading if your economy is doing badly.
The aftereffects of a negative IMF report can, and usually does, have a devastating effect on a country’s economy. If the IMF, in its forecast report, gives you the thumbs-up – investment will happen, especially foreign direct one. But a thumbs-down will send current investors packing and puts potential ones off.
In a nutshell, the IMF does not seek to curry favour with any country or government.
The latest World Economic Outlook by the IMF makes for grim reading for the European economy, come 2025. Growth for the last quarter of 2024 will be a meagre 0.8%, and come next year, 2025, it will be a poor 1.2%.
The predictions for Europe’s economic powerhouse, Germany, are troubling, while Finland, Austria, Ireland and Estonia are not expected to do much better.
With such a negative outlook for major European economies, one would have expected nothing different for Malta, one of the smallest countries in the European continent.
But the IMF outlook for Malta is the total opposite of that for the rest of the eurozone.
Consider this, and as a hard-working citizen, or an industrious entrepreneur, or investor, feel proud: Malta’s economic growth this year is 5% and in 2025 will be 4%.
This means that in 2024, Malta’s economic growth is six times more than the average eurozone growth; it will be three times more next year.
And no, it’s not a matter of luck. Far from it.
It does not take rocket science to understand that the odds are that when the entire eurozone falters, ours does too. But once again, our economy, buoyant and resilient, is defying the odds.
The next step is to ensure that Labour’s economic competence translates into a better quality of life for all
There are two factors that consistently enable us to defy the odds, economically: A Labour government that is economically competent, and a resilient workforce.
It was not always so in the case of the former; in the case of the latter, our workforce, our nation has always been resilient. But different governments have different track records.
You might recall the 2007-2009 world economic recession. That was when investment banks collapsed and the global economy faltered.
The Nationalist Party was at the helm of the country back then. You will recall the extraordinary increases in water and electricity prices.
Fuel prices were sky high, too. Inflation went through the roof, wages were stagnant, and the general feeling among the local business community and employees at large was bad – to put it mildly.
Come 2013, a new Labour government, led by Joseph Muscat, changed gear and mood, too. Business flourished; thousands of new jobs were created. Foreign direct investment soared. Tourism boomed.
And then, fast forward a few years, we had COVID. It wreaked havoc worldwide. The 2007-2009 recession was a walk in the park compared to the devastation brought by the global pandemic. Millions of jobs were lost. Businesses went bust.
But tiny Malta defied the odds. It was no coincidence – and luck had no part in it.
The Robert Abela administration steered the country’s ship safely to port: It made good for employees’ wages and saved businesses, big and small.
A few months after COVID abated, our economy grew again until another calamity took the world by surprise: a war in the European continent. Worldwide, inflation went through the roof. Fuel prices spiralled out of control, and jobs were again lost, and business again went bust. But not in Malta.
Abela’s Labour was adamant in keeping Malta’s head out of the cruel waves that engulfed Europe.
It rolled out subsidies to control fuel prices and launched a scheme named Stabbiltà’to keep inflation in check. And it worked. It worked to the point that the IMF has now told us that Malta’s economy shall register the biggest economic growth in 2025 from the entire eurozone.
To say that we should be proud is an understatement. A safe pair of hands at the helm of a country makes all the difference. Just compare 2007-2009 with 2024 and the IMF outlook for 2025.
The facts are loud and clear. This is a stark reminder that economic competence makes all the difference. And budget 2025 will only make things better. Having one of the strongest economies within the EU, the next step is to ensure that Labour’s economic competence translates into a better quality of life for all. There is so much more to do. But it will be done. Labour is today the party of economic competence.
Cressida Galea is a Labour MP and an economist.