For Gordon Cordina, Executive Director, E-Cubed Consultants, “the COVID-19 event warrants a clear economic strategy.” This, he explains, should be developed through three related impulses.
“First, to sustain confidence and keep business whole through grants and loans; second, to engineer a gradual recovery in domestic and foreign demand for business to restart; and, third, to undertake the investments needed towards economic competitiveness for years to come, especially to succeed in the new ways of doing business under COVID,” he asserts.
In his view, Malta is still operating within the first imperative, and this is “likely to continue to be needed for at least some more months.”
Despite this, the second has “tentatively started” while the third goal “is as yet incipient” and this is where the forthcoming Budget 2021 should be moving towards. “Overall, the objective to maintain confidence and business integrity has so far been, by and large, achieved, with employment and activity levels having been conserved to a better extent than in other countries.
“This success requires results in the other two areas in order to be sustained, at a time when the COVID situation is straining fiscal resources,” Dr Cordina explains.
Thus, economic competitiveness, he continues, will be reliant on new approaches. “Going digital, going green and specialising in less vulnerable niches will be key to future success,” he specifies.
“This approach needs to permeate all sectors, especially the worst hit ones. It is also an approach which our economy and business have been calling for for years, and the COVID situation may, to an extent, be seen as the opportunity which has created the tipping point to effectively move in these directions,” he adds.
He points to the tourism sector as being in dire need of a sustainable approach, saying that “the mantra of lower numbers and higher value added is now a necessity rather than a desirable goal.”
Such a change in direction will necessitate an overhaul in the way in which Malta is marketed to incoming tourists, as well as how the island transports and accommodates visitors.
Along the same lines, Dr Cordina sees the necessity for change in wholesale and retail, as well as construction and real estate.
“In both these sectors, it is not enough to stimulate demand. Economic policy also needs to ensure that business is in a position to provide effective supply, especially in situations of difficulties in logistical arrangements and labour movement,” he explains.
Speaking more generally about the necessity for some leeway in plans being made for next year, the economist emphasises that the annual budget exercise works as “part of a continuous programme of reform and development under EU fiscal monitoring frameworks”, an approach which allows for flexibility “within a trajectory”.
For, as a result of the pandemic, the original intentions for 2020 had to be altered by “means of more frequent interventions and the permitting of deviations from long-term stability targets on the levels of fiscal deficit and debt.”
And next year, this dynamic “will need to continue for a time,” Dr Cordina says, adding that, despite the fact there are the instruments to allow for such flexibility, these are “by no means a long-term panacea”.
Rather, “getting economies and business to function again will be key to sustainability. This could take the form of sporadic waves for the time being, until the necessary adjustments towards stability can be achieved.”
This is an extract of a feature first carried in the September edition of the Commercial Courier