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maltatoday, SUNDAY, 24 MAY 2015 23 Opinion Labour and the economy: the markets don't lie I n the run-up to the 2013 general elections, there were many in the PN who attempted to frighten the electorate by portending a strong economic downturn if Joseph Muscat were to win the election. Some even went as far as saying that a Labour victory would see Malta ending up like other EU Mediterranean countries seeking a monetary bailout. Since Labour's electoral victory, the Nationalist spin doctors have continued to portray a negative picture of the Maltese economy. In the few occasions that they acknowledged that the economy is doing well, they credited this success to the previous government. But what is the true situation of the Maltese economy and its financial sector? This question is best answered by the financial markets – markets that have no political allegiances and whose prime motive is profit. And accordingly, they give a very objective picture of a country's economy. Since the beginning of 2014, yields on Malta government securities have decreased significantly. Comparing yields on MGSs between 2014 and 6 March, 2015, yields on MGSs in the five-, 10- and 20-year decreased by 1.4%, 1.8% and 1.9% respectively. This means that investors were willing to lend to the Maltese government at lower rates of interest: certainly a show of confidence in the Maltese government and its management of the economy. It also means that the cost of borrowing for the government has been cut and this is very good news for the country's fiscal position. To the above some Nationalist commentators would point out that interest rates on government securities have decreased throughout Europe. But when a country is not doing well economically, yields on government securities increase. A number of European countries have witnessed this over the past years. And I intentionally chose a 6 March, 2015 cut-off date to eliminate most of the quantitative easing effect. The confidence that public and institutional investors have in the current Labour government is also evidenced by the large demand for such securities in the primary market. In February 2015, in a few hours the Treasury Department received applications for €443 million, well above the intended issue amount of €120 million and the overallotment option of €60 million. This is certainly another vote of confidence in Labour's economic management. The positive judgment of the domestic financial market was confirmed by international rating agencies. In February 2014, Fitch Ratings affirmed Malta's rating with a stable outlook, stating that the Maltese economy had outperformed its eurozone peers. Fitch estimated that the GDP in 2014 had grown at a higher rate than in 2013 and was much higher than the Eurozone average. Private consumption was supported by an increase in disposable income, thanks to lower energy prices and a higher female labour participation. The latter shows the budget measures to attract women to the world of work are bearing fruit: a far cry from the Nationalists' negative campaign that 'Labour won't work'. On the contrary, currently Malta has one of its lowest ever unemployment rates. One can safely say that Labour is working. As with Fitch, Standard & Poor's confirmed Malta's credit ratings with a stable outlook, again foreseeing that Malta's economic growth would outpace that of its eurozone partners. One of the major reasons attributed by S&P for this growth is investment in the energy sector, showing how right Labour was to invest heavily in the crucial energy sector, another confirmation of Joseph Muscat's sound economic management. It is clear that the various PN officials and particularly Simon Busuttil have been trying to deceive the electorate, by portraying a bleak economic situation when the reality is quite the opposite. The Nationalists seem to believe that they have a monopoly on good economic management. But this is far from reality. In fact, Labour's economic performance greatly exceeded that of the previous administration. This can be confirmed by statistics. For instance, during the period 2008-2012 the average economic growth of the best eurozone country was 4.4% while Malta's rate was only 1.8%. On the other hand during the period 2013-2014 the average economic growth of the best eurozone country was 3.7% while that of Malta was 3.1%: while the average growth of the best eurozone country came down, Malta's rose. It's this factual statistical evidence that shows that the Labour government has passed the tests of both local and foreign markets with flying colours. These markets are totally objective. The statistics show clearly that the economic performance of the Muscat administration is exceptional. Busuttil's negative campaign is not working and the Maltese people can see right through it. The people of Malta deserve a government that is optimistic and works to achieve a better standard of living for the country as a whole. Aaron Farrugia is a member of Labour's national executive committee The economy's true situation is best shown by the financial markets, which have no political allegiances but profit as their prime motive Factual statistical evidence shows Labour has passed the tests of both local and foreign markets with flying colours I would like to receive the newspaper MaltaToday Midweek for a period of one year. Name & Surname.................................................................. Telephone: ........................................ Address ...................................................................................... E-mail: ........................................ FOR €42 YO YO Y U CAN RECEIVE THE MALTATO ECEIVE THE MALTATO ECEIVE THE MALTA DAY MIDWEEK, FOR A PERIOD OF ONE YEAR. 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