Malta is the only peripheral country of the euro-area that has manaoeuvered through the euro-crisis without major bruises. It has been so discreet that few people have noted the country having been part of the EMU for almost five years.
Its economy has continued growing at respectable two percent per year since 2010. Its tourism has reached record numbers in 2012, the number of tourists likely to exceed that of total population of 400.000. Its unemployment rate of 6.4 per cent is one of the lowest among the 27 member states. It remains attractive for foreign direct investment.
Five reasons account for this success:
- A stable, conservative government throughout the first decade of the century, which refrained from populist concessions to its voters.
Its budget deficit derailed therefore briefly only to 4.7 per cent of GDP in 2008. As of 2011 it was again well below the 3 percent ceiling authorised under the Maastricht Treaty. Its public debt ratio of 70 per cent is one of the lowest in the EU.
- A well trained labour force.
Successive governments have invested heavily in education. Thanks to these efforts, Malta boasts of a multilingual labour force able and flexible to work in modern industrial plants, financial institutions or maritime and tourist business.
- A moderate wage policy.
Employers and trade unions did not follow the temptation of other new euro-zone countries to drive up wages beyond the productivity increase . This has kept the country competitive and attractive for foreign investors.
- Solid banking supervision.
The banking supervisor has kept a strict eye on banking practices, which prevented the two main main banks from undertaking risky operations abroad and helped Malta preserve its role as a leading European financial service centre, especially for mutual funds.
- The tiny size of the country.
Last not least, its high population density of 1300 people/sq km has protected the island from the follies of property bubbles.
Other countries would find it difficult to replicate such performance. Still they might wish to have a closer look at the “Malta experience”.
Eberhard Rhein, Brussels.