The key economic performance indicators continue to look good for this and next year. GDP growth, unemployment, debt and fiscal balances are all projected to be better than those of most EU countries. It is quite a different story, however, for non-financial indicators that reflect the challenges that Maltese society has to address in the next few years.

The European Union’s spring economic forecast confirms that, thanks mainly to a substantial increase in domestic demand, the Maltese economy will grow in real terms by 5.5 per cent this year and by 4.8 per cent in 2020. With unemployment at four per cent, the country has practically achieved full employment.

Investment, which now has hit the 20 per cent target when compared to GDP, will continue to grow in 2020. Thanks to the shift to the services sector, the import content of Malta’s exports has been steadily declining in the last few years. However, as private and public consumption is likely to continue to grow as a result of the good economic situation, imports will increase, turning the growth contribution of net exports from positive to slightly negative.

This is not a wrong place to be when the international macroeconomic outlook is peppered with risks that may affect the Maltese economy as our trading partners feel the impact of escalating trade tensions and possible geopolitical turmoil. Employment creation assisted by the importation of foreign labour and continuing significant private and public consumption will give a short-term boost to economic growth but will have limited impact on growth in the long term.

The inflation profile has so far been subdued as imported labour has dampened the pressure for wage increases. However, it will be a mistake to declare inflation dead. Accommodation costs are rising at a very fast rate and this is affecting both tourism-related expenditure and also the cost of living, especially for expatriate staff who are finding that the cost of accommodation is offsetting a good part of their salaries.

The cost of the current benign economic dynamics is evident to those who look at the gauges on the country’s social dashboard that do not measure just financial indicators.

The Minister of Health, for instance, has remarked that the increase in population is stressing the public health services. Anyone who needs to use the public health system can confirm the long waiting time to get the required services. Building up extra capacity in this sector is not only expensive but also takes a long time to produce the level of benefits the public expects.

The investment in the roads network is commendable as the traffic management system remains chaotic. When the construction of the planned Gozo tunnel starts in earnest, the financing costs could severely impact public finances and create even more challenges to the environment that has so often been sacrificed on the altar of economic progress.

The risk of taking economic growth for granted is a real one. Unless the dividends of the current phase of robust growth are invested in improving the quality of life of people, many will, sooner or later, realise that equating economic growth with social achievement is no more than a fallacy.

The government will do well to plan far beyond the likely economic situation in 2020.

This is a Times of Malta print editorial