3 Economic activity in both the euro area and the United Kingdom, Malta’s largest trading  1  Eurostat Statistics in Focus 31/2008. 2  Financial Times “The cogs are clogged ”, 16 February 2010. 3  IMF Update of World Economic Outlook, January 2010. BIS Review 50/2010  1  partners, declined by 4.1% and 4.9%, respectively. This contraction had inevitable consequences for labour markets, with unemployment increasing to levels not seen in decades. The combination of lower tax revenues and higher outlays arising from the operation of automatic stabilizers and fiscal stimulus programmes took their toll on public finances, with deficits in a number of countries rising close to, or even exceeding, double digit levels. The growth rate of these economies over the coming years will be constrained by the inevitable fiscal consolidation required to bring deficit and debt ratios back to sustainable levels. These recessionary headwinds inevitably took their toll on Malta’s open economy. The impact, however, proved less severe than might have been expected. The economy came out of the recession in the fourth quarter of 2009, after contracting for three consecutive quarters. On a seasonally adjusted basis, the peak-to-trough drop in GDP was around 3.0%, compared to 4.7% in the euro area. The relative resilience of the Maltese economy is attributable to four factors. First, membership of the euro area has enhanced its capacity to withstand external shocks.
While the world has been analyzing and discoursing for years on the causes, manifestations, and lessons learned from the global crisis, our academic community rarely expresses any views on these issues and seems to be still encapsulated in its own circle, engaged in its internal management or even day-to-day problems. Therefore I am glad now to admit that in this also VUZF University is an exception. I have been following with interest the public appearances of your rector, vice rector, and other professors and academics of your university. VUZF University representatives have often  BIS central bankers’ speeches  1  come up with authoritative public comments on topical economic subjects of great public significance. Today I congratulate VUZF University for outpacing “the older” universities of economics by organizing this timely discussion. The announced topic – “Global and Regional Challenges to the Economy and the Financial System: Do We Have Working Solutions?” – speaks for itself and is an eloquent testimony to the importance of today’s forum. Because external environment is of special significance for the dynamics of such an open economy as that of Bulgaria. It is a known fact that the original causes of the global financial and subsequently economic crisis did not stem from our region or from Europe’s emerging markets. Still, we should in no way take comfort in the external origin of the crisis because no matter what the origins of the crisis might be, we, here in Bulgaria, must deal with its consequences.