Other services were deeply impacted by the shutdown of non-essential services, and other sectors – such as manufacturing – were adversely affected by disruptions to the global supply chain. Although GDP still posted positive growth in the first quarter, the contraction in the second was broadly at par with that registered in the euro area. Incoming data suggest that economic activity began to recover and sentiment improved in the third quarter as the most disruptive containment measures were lifted, Page | 1 Document Classification: Public  but rising positive cases and newly introduced restrictions will likely weigh on activity in the fourth quarter, so that confidence among consumers and business is likely to take longer to recover than previously anticipated. During these uncertain times, projections have become increasingly difficult, as economic activity is intrinsically linked to the evolution of the pandemic, its impact on confidence of consumers and businesses, and very importantly to policy support and prospects of a medical solution. Unlike the great financial crisis of 2008-2009, the fiscal response has been prompt and significant, aided by the fiscal space accumulated in recent years. Liquidity measures such as tax deferrals, moratoria on loan repayments and the Malta Development Bank COVID-19 Guarantee Scheme, have all been fundamental in limiting bankruptcies by providing liquidity support. In addition, the Wage Supplement Scheme has been very successful in avoiding higher unemployment. Additionally, the voucher scheme has been a welcome boost to support domestic consumption, and provided some relief to the retail and hospitality sector during summer.

Beyond the Pandemic  Address by Dr Mario Vella Governor, Central Bank of Malta during the IFS webinar Continuity Post Pandemic: An Economic Perspective  Thursday, 10 December 2020  Undoubtedly, 2020 will be remembered as the year of the COVID-19 pandemic, which has tragically led to loss of lives and economic hardship for very large numbers world-wide. The outbreak of COVID19 and the measures to contain the spread of the virus brought about a global economic shock without precedent after the Second World War. The world economy entered a recession, which has been far deeper than that experienced during the Great Financial Crisis of 2008-2009. Containment measures were highly effective in controlling the first virus outbreaks, though this came at a very significant economic cost. With the initial lifting of measures, economic activity began to recover and sentiment did improve. However, active cases rose sharply again and the health situation deteriorated by the end of the summer, forcing many countries in Europe to re-introduce containment measures by October. Although the level of stringency of the latest containment measures were less than those implemented during the first wave, activity is still more restricted compared with the third quarter, undermining global recovery prospects. Similar developments could be observed in Malta. Activity was significantly restricted during the second quarter of this year, in an effort to contain the spread of the virus. Travel was practically banned – barring for repatriations – with severe consequences for the tourism industry.