Monday, 17 March 2014

Proud to be green

EUR Update_Feb2014_Deflation Blog.007

No it has nothing to do with St. Patrick's day and the festivities among the Irish Community all over the world.

It has all to do with a study carried on the IMF's web-site categorising Malta among the virtuous Euro area countries.

In an article titled "Euro Area: Deflation versus Lowflation"  posted on 4th March 2014, there is the above chart which shows the countries on the left in green which are having an inflation rate higher than 1%.  Malta is in this group with the best of the breed i.e. Finland; Germany; Belgium and The Netherlands.   On the right the countries in red as experiencing inflation lower than 1% and causing apprehension about the risk of their flirting with an outright deflationary environment.

Not only Malta is on the right page but we are the country with the most normal rate of inflation giving a real interest rate of about 2% which all economic text books would define as having the optimum position often referred to as Goldilocks economics i.e. not too hot  causing high inflation and not too cold causing risks of stagnation and deflation.   Our net debt as a percentage of GDP is also healthy.

Great to be green especially on St. Patrick's.

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