This week was marked by an element of political instability in Europe which reflected itself in the negative performance of the stock markets.

The elections in Greece produced a stalemate with losers and no winners.

The municipality elections in Italy have produced a victory for those who are very much anti-political establishment.

The presidential elections in France may set off a process that could prove to be damaging for the euro, if they renege on the fiscal compact.

Meanwhile in Malta, we inaugurated the Safi Aviation Park which is an important milestone for the development of aviation activities on our island.

What I want to present is this paradoxical situation.

On the one hand, we have a business-as-usual situation in Malta, with an economy that is seeking to face the challenges posed by the international economy successfully.

This is evidenced further by the latest IMF Report (more about this in the coming week).

On the other hand, we have a deteriorating political situation in a number of countries as a result of an inability to keep their economy moving forward in a difficult international scenario.

The pertinent question that needs to be asked is what should we attribute this to?

Like any question of this nature, the answer is multi-faceted. There are a number of reasons why we are faring better in Malta than a number of other countries.

We need to keep in mind that companies operating in Malta are still facing competition fromlow-wage countries such as China and India.

In fact we can never have a production cost that competes with that of these two countries and we should not even aim to have it.

This would mean that there will always be some economic activities that will move away from Malta towards such countries.

Thus we face not only a difficult situation in our export markets, as well as closure of an important source of income for our businesses, namely Libya, but we are also facing increasingly strong competition.

One of the reasons why we have withstood to this three-pronged attack has been our ability to innovate, to change.

It has not been a haphazard change but a planned process of change based on a clear, intelligent strategy.

I do understand that there are segments of the population who have had enough of change and may be suffering from change fatigue.

However, if we had not changed, the impact on our economy could have been catastrophic.

Another aspect that needs to be kept in mind is that we have not rendered our public finances unsustainable in the wake of the 2008 international financial crisis and subsequent recession, as happened even in erstwhile successful countries such as Ireland.

We have not had to introduce harsh austerity measures that would have crippled our economy as they have crippled that of Greece, Italy and Spain.

Sustainable public finances have meant that we could allocate resources to save jobs and to create new ones. Moreover, foreign investors feel more at home in a country which manages its public finances well.

The third aspect, apart from the change management process and sustainable public finances, is education.

Our country can prove that there is a strong link between the quality of the educational system and the creation of jobs.

Our ability to face up to the challenges posed by the international economic situation is also due to the extensive investment in education in the last 25 years.

That investment has given value to the quality, efficiency and productivity of our human resources.

Since the situation we are living in is indeed paradoxical, it is difficult to envisage how long we can continue doing so.

It is highly improbable that the international situation will not eventually leave its negative impact on our economy. So far we seem to have weathered it well.

However, it is critical that the world’s leading economies register growth in the coming months and the political tensions in some EU member states are resolved.