Today is the start of 2016. We all wonder what the new year will bring with it. In moments like these it is always worth listening to Lucio Dalla’s song L’anno che verra’, where in a very ironic way he refers to all the good things that will happen in the following year, in spite of the fact that the present is so bleak.

My commentary is strictly related to economic aspects. However, economics tends to touch on everything under the sun (as students of the subject know only too well), which may explain why no one listens to economists (or so the newspaper The Economist commented some weeks ago).

I believe that developments in 2015 will continue to have an impact in 2016. In spite of the recent interest rate increase by the Federal Reserve of the United States, low interest rates will stay with us for a few more years. The inflation rate will also remain low, as any increase in that will trigger a negative impact on purchasing power.

Scandals such as Volkswagen’s are bound to set in motion another round of corporate governance rules, keeping in mind that in 2016 we will start to feel the full impact of new rules for the banking and insurance sectors. The environment and climate change will keep centre stage. All these issues are spill overs from 2015.

So will 2016 be a copy of 2015? They may eventually look very similar to each other. However, in effect we have had an evolution. The need for sobriety, expressed by Pope Francis in his public statements over Christmas, will be increasingly felt, as we increasingly recognise that markets and the pursuit of wealth will no longer be seen as the answer to all economic problems.

Financial reform to ensure that we no longer have the few benefitting at the expense of the many

There is an increasing demand for attention to be paid to income inequalities (within countries and between countries) and the harm being done to the environment, and for the lack of respect for the common good to be addressed in an effective manner. The results of elections in France and Spain in the latter part of 2015 are an evident sign of this demand.

From an economic perspective, the individual will be given importance. However, this will not happen in the way it has in the past – by allowing individuals to benefit by exploiting others. It will happen by taking into account those on society’s periphery, those who have so far been hidden behind average figures. There will be more demand for economic and financial reform to ensure that we no longer have the few benefitting at the expense of the many.

I believe these issues will influence greatly economic decision-making in 2016.

Focussing on Malta, according to the results of a Eurobarometer survey, the Maltese are more upbeat about the economy. This is positive news in itself. However, this is not a guarantee that the coming year will not present economic problems. One hopes that those who have their hand on the tiller of the ship will be able to steer around such storms, especially since past history shows that some of these storms come at us quite unexpectedly.

We should always avoid talking ourselves into a recession. At times like these, while one is enjoying the clear blue skies of the local economy, there is also the need for some sobriety.