A week is a long time in politics. Thus one can imagine how much longer a year feels. I believe that 2009 feels like it has been longer than usual, mainly because of the consistent and constant level of uncertainty that has surrounded the economic scene, be it at a macro level, be it a micro level. However, I equally believe that as a country we are emerging from this year in a much better shape than other countries, and probably in a much better shape than we had dared to hope for. When one looks at the pain Greece, Iceland and Ireland have gone through and are still going through, one appreciates how resilient our economy has been.
It could well be that since the impact on our economy of the international recession and the meltdown in the financial markets, coupled with the volatility in the foreign currency markets and the stock markets, and the ever threatening price of oil, has not been as dramatic as on other economies, the level of uncertainty has been sustained. This would be due to the fact that we would always be feeling that the worse is still to come; especially since in the past international recessions have hit our economy with a time lag. And time does pass slowly when one is in waiting mode!
On a macro level our economy has had to face three key issues - job creation, inflation and the fiscal deficit. Underpinning these three issues is the fact the gross domestic product has decreased for three quarters in a row. Starting with the fiscal deficit, on the one hand we need to note that we have a deficit that is above the three per cent threshold that was determined in the EU Growth and Stability Pact, while on the other hand we need to remember that only one country in the EU did not go above this threshold and the average fiscal deficit in the eurozone is around 6.5 per cent. Against this background, how critical an issue is the fiscal deficit?
Inflation had reached worrying levels in the first half of this year. At that time the medium term view was that the rate of inflation would be moving downwards. In effect this is what happened. Given the continued volatility in the price of oil and in the currency markets, inflation may hit us again. To counteract this possibility, the government has sought to stabilise the prices for water and electricity for the coming year. Increased competition in the local market has also helped to contain price increases, as is happening in the case of groceries. In spite of this, during the last 12 months there has been the constant fear that prices will spiral upwards and this fear has certainly worked its way into the purchasing decisions of households.
The third issue is job creation. I have always believed that this is the number one economic priority for Malta. During the past year, the government has sought to address this issue through a micro strategy of targeting specific companies and supporting their investment plans to ensure that they retain or grow their investment in Malta. There was also the fear that there could be one or more companies who would still not be able to cope with the pressures of the recession and close its operations here. Waiting for something like this to happen, even though so far it has not happened, must have been very stressful, especially when there was no end in sight to the international recession.
One aspect of human psychology is that time seems to pass more slowly if one has nothing to do. On the other hand, if one keeps oneself busy and faces challenges head on, a week is too short and even a year is at times too short a period to achieve one's objectives. Although we may be thankful that this year is coming to an end, we should also look forward towards 2010 with a willingness to face the economic challenges head on. We should not be wasting too much time on armchair critics, as somehow they make the year seem longer!