Economies of spin

Our appeal: government must assure us it will retain a firm grip on the tiller of the economy. As for the opposition, it ought to at least concede that constant scaremongering is an ill wind that blows nobody any good.

Cartoon for MaltaToday on Sunday by Mark Scicluna.
Cartoon for MaltaToday on Sunday by Mark Scicluna.

As Malta grinds towards an inevitably heated election campaign within the next few months, it was perhaps inevitable that news of an apparent economic recovery would be subject to instant political spin by both sides.

For a government which has set such store on its own economic credentials - marketing itself (and especially its leader Lawrence Gonzi) as a 'safe pair of hands' when it comes to economic management - Friday's announcement that the country seems to have clawed its way out of a recession must surely have been received as a triumphant vindication of its often contentious economic policies.

Quarterly figures released by NSO have confirmed a 0.9% growth in Malta's gross domestic product for the second quarter of 2012: signalling the island's emergence from the recession it encountered at the start of the year, when negative growth had been registered for the second consecutive quarter.

These figures alone appear to justify Finance Minister Tonio Fenech's optimistic projections, spelt out last June, that job creation, wage increases, exports and tourism had all shown an upward trend which was expected to continue until the end of the year.

They also bolster the Prime Minister's claims this week that the otherwise negative outlook confirmed by international credit ratings agency Moody's for 2012 - which forecast a higher deficit (2.9%) than acknowledged by government, while retaining its A3 credit rating for Malta - would correct itself by the end of the fiscal year.

Naturally, this latter claim is likely to remain open to doubt. Even Tonio Fenech himself has had to downwardly revise his earlier deficit predictions: admitting that the deficit will be closer to 2.5% than his own estimate of 2.2% by the end of 2012.

Still, this should not detract from government's overall economic achievement in itself, which appears to confirm Malta's continued resilience to the ongoing crisis. Even without these figures, it will be conceded that Malta has not quite faced the often grisly consequences of economic meltdown, of the kind we have seen in other European economies. Across Europe the pattern has involved large-scale job losses, a general downsizing of social services, and in some cases the outright removal of State pensions, among other indications of 'corrective economic surgery'.

Malta has so far been spared these eventualities; and it would be unrealistic to the point of absurdity to deny that government can claim at least part of the credit for this performance.

And yet, perhaps predictably, this is precisely how the Opposition seems to have reacted. Arguing that "Maltese families are still in recession", the Labour press responded to the NSO figures for all the world as if economic growth had nothing to do with national prosperity at all.

Nor is this 'economy of spin' restricted only to the Labour Party. The PN's counter-offensive likewise betrayed a tendency towards twisting reality to serve political ends. One example would be the interpretation given by the party (and also by the finance minister) to an article recently penned by Labour MEP Edward Scicluna in the wake of former PM Dom Mintoff's death last month.

Ostensibly, Scicluna attempted to define the key characteristics of the former Prime Minister's economic vision (or 'Mintoffianomics', if you prefer). This was enough for Fenech to float the suggestion that Labour, if elected next year, would once again return to the protectionist policies that characterised Mintoff's tenure of office... even though the very idea is not only unlikely in the extreme; it is actually impossible.

Even if Labour fully intended turning the economic clock all the back way to 1981, the fact remains that it is simply no longer a viable political option in the context of EU membership. Truth be told, little or nothing of Mintoff's 'way of doing economics' can legally be emulated in a common market scenario.

The Nationalist government must surely know this (having negotiated the terms of Malta's accession itself); yet it still plugs the line that Labour will mark a return to the 1980s - and this tells us much more about the nature of political spin than about Labour's economic policies.

Separately, the Nationalist administration might also wish to tone down its chest-thumping until there are clearer indications of a stable economic future. Moody's negative outlook may have been tempered by the revision in GDP figures; but the fact remains that government is off-target in its predictions, and the reason remains a higher expenditure than planned.

All things told, then, one can appreciate that the over-politicisation of the economy may pose certain dangers of its own. As elections loom ever larger, so too will the temptation for government to lose control of its spending in the run-up to polling day... thus undoing all its best efforts to date.

Both sides of the political divide therefore owe this country a debt of responsibility. The government must assure us that it will retain a firm grip on the tiller of the economy; as for the opposition, it ought to at least concede that constant scaremongering is an ill wind that blows nobody any good.

Other than that, the immediate prospects remain brighter today than they were yesterday. And surely, that cannot be a bad thing.

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