In doing my planning for this week’s contribution, I recognised how difficult it is for analysts to comment on financial markets: by the time one writes a comment or makes an assessment, one may have been overtaken by events.

My starting point was a comment by Mario Draghi, president of the European Central Bank. Last week he stated that the eurozone may not be able to sustain another crisis in the current situation. This obviously points to the fragility of the economic recovery that we have had. To compound matters further, analysts are claiming that the growth spurt in the US may be coming to an end.

So I decided to have a look at what has been happening in the financial markets, to assess whether they have been factoring in an impending recession. My premise was that equities had been losing value since last November. However, I soon had to recognise that they had increased in value since the lows registered in February.

The UK FTSE index was up by around 14 per cent since February. The German DAX index was up by around 10 per cent in the same period. The New York Stock Exchange index had risen by around 11 per cent. However in recent days they have all lost value once more. And I would not be surprised if by the time you are reading this contribution, there would have been another rally in the value of equities.

The conclusion that I could draw from all this is the uncertainty and volatility of the economic scenario, which then reflects itself in the financial scenario. So I decided to dig further.

We cannot take matters for granted as what we have achieved in the last 30 years has not been by a chance but by design

I came across a recent report by the chief economist of the World Bank which stated that global economic growth shall be lower than in previous years as a result of the adjustment process in China, the difficulties being encountered by emerging economies, the uncertain growth pattern in the eurozone, the nature of the growth spurt that US economy has had, the low price of oil, and I would also add, the uncertain political climate caused by a number of factors such as the US presidential elections, the referendum on UK’s membership of the EU and the threat of terrorist attacks.

Further research brought to the surface assessments made by some analysts, pointing to uncertainty and, as a consequence, to volatility.

They claimed that corporate earnings are past the peak they reached just under a year ago. If one looks at previous business cycles, one would note that recessions start between 12 and 18 months after earnings reach their peak. They are hoping that we are not rushing into another recession (some countries have not yet emerged from the last one), but that there would be a slowdown without affecting personal consumption.

With the price of oil remaining low, and inflation also at very contained levels (and hence interest rates being kept at around or below one per cent), analysts are hoping that consumer demand would not decrease and would make up for any decrease in investment by businesses.

However, it is worth asking how long inflation will remain so low. The fall in the price of oil has pushed the inflation rate down. But if one were to remove the impact of the price of oil, would the inflation rate remain so low? Once the impact of the lower price of oil tapers off, will the inflation rate bounce back?

With a world that seems topsy-turvy, it is very difficult to understand where the global economy is going. And therefore one can understand Draghi’s comment that I started off with – the eurozone may not be able to sustain another crisis in the current situation.

The Maltese economy is a highly open one, with its dependence on exports of good and services and foreign investment. Even so, it is totally insignificant in the context of the global economy. It is therefore always very difficult to map out a medium term economic strategy in such a context.

We know (even if the world may not know it) that our economy has consistently shown its resilience in a difficult international economic environment.

Should we be doing something to sustain that resilience? We cannot take matters for granted as what we have achieved in the last 30 years has not been by chance but by design.