Feeling the growth in GDP - Michael Briguglio
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Feeling the growth in GDP - Michael Briguglio

You probably know that Malta’s gross domestic product went up by 7.5 per cent in real terms during the third quarter of 2018. You might have read this in the newspapers or heard it on the news. If you are part of the growing group which gets its news from the social media, you might have encountered government propaganda reminding you about the best of times.

The statistic is correct. It represents GDP growth in real terms as per National Statistics Office figures. This is an inflation-adjusted figure that quantifies the value of all goods and services produced within the economy during the year.

This figure was mainly the result of an increase in both domestic and external demand through consumption expenditure, household expenditure, government expenditure, exports and other forms of expenditure.

Indeed, GDP at current prices went up by €281 million, which were distributed into a €64.5 million increase in compensation of employees, a €162.9 million increase in gross operating surplus of enterprises and a €53.5 million increase in net taxation on production and imports.

During the same period, Malta’s gross value added increased by €218.4 million when compared to the same quarter last year. This represents the difference between output at basic prices and intermediate consumption valued at purchasers’ prices.

Judging by these figures and Malta’s respective top position within EU classification, it looks like Malta’s economy is soaring. But this figure alone cannot explain Malta’s socio-economic situation.

An example that may help explain this is the following.

A cursory look at countries around the world currently experiencing high GDP growth rates mostly includes developing countries and not the most developed ones. Their economic growth must be seen together with other indicators to get a valid picture of people’s quality of life.

As regards Malta, I think it is high time that the National Statistics Office introduces additional indicators which look into the quality of life and standard of living of different social groups.

It looks like Malta’s economy is soaring. But this figure alone cannot explain Malta’s socio-economic situation

It should be in a position to inform the public sphere how the prices affect different social groups. Food prices tend to have a much greater weight on low income earners, as the latter spend a higher percentage of their income to buy basic products, compared with higher income earners. The same can be said on other basic products and services such as rent, utility bills and medicinal products.

When official figures on the cost of living are published, they do not distinguish between different levels of income, but in the real world it is clear that cost of living compensation given to workers and pensioners are not realistic.

To give a basic example. A basic food stuff costing €1 eats up one per cent of the income of someone who earns €100. But it eats up only 0.1 per cent of someone earning €1,000. The food stuff is essential for both persons, but the latter is paying proportionately much less of her or his income to buy it.

Last July, President Marie Louise Coleiro Preca said the following in relation to a study by the National Observatory for Living With Dignity and the National Centre for Family Research, both of which are research entities within her Foundation for the Well-being of Society:

“...Food constitutes the highest expenditure being made by four-person families in Malta and Gozo. However, it is alarming to recognise that, in order for the food that they consume to be considered healthy and clean, such families have to spend in excess of €500 a month. This is a prohibitively high figure for many families, which means that individuals suffering from vulnerability or precarity of any kind are finding it almost impossible to access adequate food.”

In addition to this one should also take into account the increasing number of people who are being evicted and/or who cannot afford a bank loan or to rent property. This also includes middle-income earners from different age cohorts.

Add the €500 expense mentioned by the President to other expenses including rent, utility bills and medicinal products and compare it to Malta’s wages. The math is clear.

This is a Times of Malta print opinion piece

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