July 31, 2020
The Impact of Economic Growth
Malta has experienced an unprecedented rate of economic growth which started under a Labour Government since the year 2013. This growth was a direct result of the determination and foresight by government which laid out a strategy focussed on the creation, development and distribution of wealth. According to the official data from the World Bank, in 2019, the Gross Domestic Product (GDP) in Malta was worth 15.10 billion United States Dollars. GDP is the measure of the market value of services and goods produced by the respective country. The rapid growth in the GDP strengthens fiscal status and the economy increases in size. The table below unequivocally shows an exponential increase in the GDP for Malta which occurred since 2013 when the strategies of the Labour Government were ingrained in the economic apron.
There are two primary driving forces for economic growth, these being the workforce size and the growth in the productivity of such workforce. They both contribute immensly to the economy however the growth in the productivity increases the GDP and the income per capita. The growth in productivity enables people to enjoy a higher standard of living without increasing working hours.
This economic growth and development has led to new challenges to address the demand for services and infrastructure. As the economy continues to grow, there is an inevitable need to increase the spending on infrastructure which includes the transport network, communication systems, water and electricity and other supporting technologies. This investment in infrastructure results in a direct increase in living standards and even more economic growth in itself.
It is a chain reaction spurred by focussed economic strategies intended to take Malta into its economic future. This is because an increased investment in the physical capital of a country, namely factories, equipment, schools, hospitals and road networks, lowers the costs of economic activities thus resulting in a boost in productivity and in increases in the outputs. One such impressive investment was the government budgeting of 700 million Euros for the development of the existing transport network over a period of 7 years, which investment will reduce inefficiencies of queues and delays in the movement of goods and materials.
On the other hand, increased production and economic growth often result in negative externalities and income inequality where those not related directly to the growth sector of the economy suffer most.
Hence, within the context of the above, it is important that government entities pool expertise to plan future developments which support economic growth in a holistic manner resulting in improved efficiencies and effectiveness. This can be achieved by establishing synergies in the cross-ministry coordination strategies. Also, having such coordination within a robust action framework is essential to develop new economic markets which will continue to spur economic growth where such new markets with promising potential include the research sector, alternative upmarket tourism sectors, provision of specialised services and re-design of the agricultural sector tapping under-developed niches.
Strong foundations for economic growth have been laid and now it is our responsibility to take them to the next level.
Audrey Testaferrata De Noto
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