MUCH was made of the news that the economy had grown by 3.4 per cent in the first quarter of 2017 compared to last year by the government. It was after all the highest quarterly growth of the economy since 2008, before the recession had kicked in. It was an impressive figure that exceeded the forecasted growth rate for the year, which is just below 3 per cent.
President Anastasiades was very pleased with the news, bearing in mind elections were only nine months away, saying the growth “exceeded any optimistic forecast” and that the people’s sacrifices made “full recovery” possible. He even sounded a warning, saying that the government would continue its prudent economic policy so that “we do not return to the unpleasant conditions of the past.”
His finance minister echoed these sentiments stressing that the same policies would continue in order to recover the lost ground. More worrying was Anastasiades’ general remark that “economic growth creates the precondition for gradually but effectively tackling the problems caused to our people by the financial crisis.”
While this could be just another political platitude, it could also be interpreted as sign of the president’s intention to start spending money in the run-up to next year’s elections, in order to “effectively tackle the problems caused to our people by the financial crisis.” Mindless government spending has always been an integral part of an election campaign, because it is considered a vote-winner. The only time the state spending taps were not turned on was in 2013 and that was because the state was bankrupt and the banks were on the brink.
Anastasiades has already shown his intentions. Apart from giving in to the pay demands of nurses, earlier in the year, more recently, he has announced a benefit for mothers of big families, made promises of covering the losses of pension funds in the hair-cut and has told bank bondholders that the state would help them out when it can afford to do so. None of these measures suggest there was any substance to the president’s assertion that he would not give in to populism.
There is a real danger Tuesday’s good economic news would fuel the populist spending that no president has been able to resist in the run-up to an election. And Anastasiades has not shown that he is any different from his predecessors in his political choices and actions. He followed prudent economic policies, because he had no choice, but now there is no troika to monitor policies and the economy is on the growth path, we fear he will revert to the traditional method of winning votes – increasing spending.