There is no doubt that the economy of this country is doing well. We have a GDP growth of five per cent in real terms, the number of unemployed persons is down to 2,889, we have reached the two million mark in terms of tourist arrivals, our exports are 141 per cent of the gross domestic product, the public sector deficit is down to around one per cent of the gross domestic product and personal tax rates are fairly low.

There are no doubts some clouds on the horizon but none that decision makers are judging as ominous.

The point is not the present but the future. It is not enough that we have a strong economy today, we need to make sure that our economic success is sustainable in the future. We must start planning for tomorrow’s success today as success does not happen on its own.

There are a number of questions that need to be raised. My intention is not to create doubts where there should be none but to develop a list, which admittedly will be partial in two ways. It will be partial as it will not be an exhaustive list. And it will be partial because it will reflect my personal bias. Each item on this list requires an extensive discussion on its own, so I will limit myself to making a few comments about them. To this list, one would also need to add other items.

The first issue that needs to be considered is the population. Data available on internet shows a total population of over 420,000. My guesstimate and the guesstimate of many people is somewhere around 450,000-475,000. This means a population density of around 3,720 persons per square mile, making Malta one of the most densely populated countries in the world.

It is accepted that the economic growth we have experienced has been made possible by the large number of expatriates. However, how sustainable is further population growth? If further population growth is not sustainable, does it put into question the sustainability of future economic growth?

The next element is tourism. During 2016, we reached just under two million tourist arrivals. The economic wealth that these tourists generate is very significant. However, can we achieve even greater numbers of tourist arrivals? And if we do, is it desirable? Do we have the capacity for further growth?

The issue of capacity brings to the forefront the infrastructure of the Maltese islands. There has been significant investment over past decades in developing certain elements of the infrastructure, such as a new air terminal, the telecommunications infrastructure and the electricity generation infrastructure.  Even so, irrespective of past investment, can they cope with the demands placed by further growth? Moreover there have been certain elements, such as roads, that have not kept up with demand at all and as such require massive investment.

An element of current economic growth is represented by domestic demand. We have had a positive macro environment in that while the economy was growing, interest rates were kept low. To what extent has the increase in personal consumption been stimulated by low interest rates?

Once interest rates start to increase, as they are bound to do, how will personal consumption react? Will it experience a sudden downturn as discretionary income would be severely affected? So how sustainable is the current level of personal consumption? Linked to this is the current high level of private sector borrowing. Is it sustainable in future?

One of the benefits of Malta’s situation is that it can plan for the future from a position of strength. We do not have an economic crisis, causing us to change tack, with no financial resources to support such an initiatives. We have the luxury to think seriously about our options for future economic growth, without having to take snap decisions.

History also shows that our economy has proved itself to be resilient when faced with a crisis. On the other hand time will eventually run out. No country has as yet managed to beat the boom/bust cycle. Therefore we need to start working today on making our economy sustainable.

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