At times you hear people talk about Malta and its economy and the claim is made that certain measures and policies that were applied effectively in other countries cannot apply to us as we are very small, we have no natural resources that can earn us foreign exchange, we are an island, we have social realities that are different to those of other countries, etc. You get the feeling that some may well believe that we are unique. From a social and political perspective we are unique, however, from an economic perspective I do not think we are.
In any case, whether we are unique or not is irrelevant up to a certain extent as we are certainly not alone in this world. And because we are not alone, there will always be the temptation to compare developments and trends in our economy with those of other countries, especially those that have characteristics similar to ours. The data that is being published in a most timely manner by the National Statistics Office and the data that is made available about other economies allows this comparison to be made. It will always be partial and the focus will depend on who makes such a comparison.
The most obvious measure in terms of economic wealth is the gross domestic product per head of population. A publication of the newspaper The Economist puts Malta at 47th place. Among the new acceding states of the EU, only Cyprus has a higher GDP per capita than ours. It is in the 39th place, with a GDP per capita that is 25 per cent higher than ours.
Size of population, the fact that we are an island and our geographic location have nothing to do with it. Cyprus is also an island; its population, although larger than ours, is still well under one million; it is as much at the periphery of Europe as Malta; and it has no natural resources.
Another comparison worth making is with Iceland. It ranks eighth, has a population smaller than ours, its internal terrain is very harsh with volcanic rock and it is also at the periphery of Europe to the north.
If one takes purchasing power expressed in terms of GDP per capita but adjusted to achieve purchasing power parity, Malta ranks in 37th place. This could indicate the extent of the informal economy that exists in our country. Again Cyprus is ranked higher than Malta, but we are ranked just below Portugal and Greece. This is an indication that we are not as badly off as we may think we are, although we should always be aware that we have some catching up to do.
In terms of catching up, we achieved some of that as, during the decade 1990 to 2000, we had an average annual economic growth rate of five per cent. This is still lower than the economic growth rate achieved by other countries against whom we compete for investment in the services and manufacturing sectors, such as Ireland, Cyprus and Luxembourg. It is, however, higher than the economic growth rate of other EU member states.
The data shows that we seem to have lost out during the 1980s when our growth rate was much smaller. In effect this starts to explain why we have not made the type of progress that we wish to have made. We lost out heavily in the first years of the 1980s and we have not yet recovered from this lagging behind.
One reason for this is the percentage of our population that forms part of the labour force. In this regard we perform badly, having just 38 per cent. This places us in the bottom quarter of the world league and indicates that there is still a great deal of productive resources that can be unleashed into the economy. If this were to happen, you would then expect a significant increase in our gross domestic product and given the small size of our home market, an improvement in our balance of payments position.
In fact, another aspect constantly being mentioned is the openness of our economy, and hence our dependence on foreign trade. Malta is considered to be among the 10 most open economies of the world, implying the strong relevance of whatever happens beyond our shores on our economy. What is significant is that ours is the most open economy in the EU. It is equally important to note that our deficit on the current account of the balance of payments is also among the top 10 in the world, when compared to the gross domestic product.
It is often said that comparisons are odious. They may well be. The point is that when such comparisons show a performance that is better than that of others, one tends to gloat over it. On the other hand, when a comparison shows a performance that is not as good as that of others, one tends to shy away from it.
In effect this is not a competition where one wins a gold medal or a wooden spoon depending on whether a negative or a positive trend is being shown. Comparisons such as these cannot be treated as causes of a problem but as indicators of specific situations. It is always useful to know about them and if necessary take action.