This week’s announcement by Prime Minister Robert Abela about the easing of restrictions that had been introduced because of COVID-19, must have had many breathe a sigh of relief. I believe so did the easing of restrictions in a number of other countries, especially those who, either directly or indirectly, depend on tourism for their livelihood. Moreover, it is accepted that one of the aims of the Prime Minister was to instil a feel-good factor, to encourage persons to spend.
The extent to which tourism will pick up remains to be seen. This does not depend only on travel restrictions but also on consumer sentiment. If very few tourists come after the reopening of the airport, it may actually have a counter effect to what was intended – it could dampen business confidence. This occurred when certain retail outlets and restaurants were allowed to reopen a couple of weeks ago and customers were not there. Businesses could still be operating on a reduced working week, even though restrictions would have been eased.
Whatever will happen, we now need to look to the future – and here, two elements need to be considered. These two elements are certainly not the only ones as there are many others. Moreover I have not read or heard or been told anything that gives me to understand that we will be going back to business as usual. All indications are that we will not be going back to the pre-COVID-19 situation and that the situation will gradually evolve into a new normality, not just in Malta but across the world.
As such, my comments today are not so much about Malta but about what happens beyond our shores and which we need to evaluate to make sure we manage the change that will be coming. They are comments about the need for more international economic cooperation and to reconsider how the economy is managed.
Since COVID-19 is a global pandemic that has affected the economy of all countries, the recovery needs to be a global one
In order to cushion the negative effects of the pandemic, governments have spent enormous sums of money and ran up huge fiscal deficits. They have provided support to businesses in terms of bank guarantees. Central banks have eased regulations related to capital requirements and loan- provisioning.
Once the pandemic is under control and the new normality starts to evolve, and since it will not be business as usual, governments and regulators cannot just reverse these decisions. However, governments need to act in a concerted way to ensure that the economic recovery is a global one. Since COVID-19 is a global pandemic that has affected the economy of all countries, the recovery needs to be a global one. No country, big or small, should be allowed to go it alone. Populist slogans cannot be part of the global economic recovery which is required.
The other element that we need to consider is the way the economy needs to be managed in the future. After the last global economic crisis a decade ago, there were great efforts to ensure that economic efficiency was given priority over everything else. The end result has been that, in a number of countries, real incomes have barely recovered and public services have shrunk. The common good was put aside as personal greed took over.
Part of the problem that governments all over the world had in dealing with COVID-19 has been that resources allocated to public health services had been reduced with the objective of achieving economic efficiency, to such an extent, they could not cope with the increased demand generated by the pandemic.
Social cohesion, environment protection, consumer and worker rights, a healthier population, mental wellness, and promotion of the common good do not come at the price of economic prosperity. It is wrong to position these things as a hindrance to economic well-being.
Life after COVID-19 will be different to life pre-COVID-19 and we need to be prepared with the policies and strategies to face the challenges of the new normality.