The EU published its economic forecasts for each of the 27 member states for winter 2012-2013. The main message for the whole of the EU economy is that it is slowly coming out of a period of contraction.
The report notes an increased level of confidence in the governments of member states to rein in public debt to sustainable levels and to implement much-needed structural reforms. It forecasts moderate economic growth during 2013 but expresses a great deal of concern over the continuing high level of unemployment. It also makes the point that there is no time to be lost in addressing the economic challenges the EU is facing.
That is as far as the overall picture is concerned. Once one starts reading the titles that have been used to introduce the report on each country, we start to understand the detail; and there is some devil in the detail. In some instances it sounds like a medical bulletin after a bruising rugby game.
For example, it forecasts “sluggish growth” for Belgium; talks of “anaemic consumption” for the Czech Republic; refers to Poland as “flying on one engine”. In other cases it provides for a sense of optimism, such as in the case of the UK, where it refers to “green shoots on the horizon”. In a few cases, use is made of a positive headline such as in the case of Austria, which is expected to experience “a moderate upturn”.
The title of the report on Malta is Growth Gradually Gaining Pace, which one would definitely put among the positive ones. In fact, the report provides a very favourable analysis of the Maltese economy, which serves as yet another confirmation that we have performed better than other EU economies. It is not just a case of comparatively better performance. The economy grew in 2012 and the growth rate is expected to increase.
The words used by the European Commission report as subtitles to the Malta report were Economic Growth Resumes Slowly; Supported by a Resilient Labour Market; HICP Inflation Moderates But Remains Above the Euro Area Average; Budget Deficit Projected to Widen in 2013 in the Absence of a Budget.
The message from these subtitles is very clear – we are on the right track but not everything is fine.
We need to do something about the inflation rate and we need to do something about the fiscal deficit. This does not mean that the fiscal deficit is unsustainable but rather that uncertainty in political decision-making will make it unsustainable.
This takes us to the expression used by the Clinton campaign in 1992 – “the economy, stupid”. We may be taking the performance of the economy for granted; we should not. What we have today is the result of painstaking decisions taken over the years. At the time they may have looked highly unpopular but time has shown that they were the right ones. On the other hand, a little bit of uncertainty was enough to send jitters through the Commission. We all hope that the economy will continue to perform well; it will not if the right decisions are not taken in time.
The European Economic Forecast has given us a clean bill of health. We should all be proud of it; however, let us also make sure it remains that way.