Published on www.forbes.ro
Contributor: Corneliu Bodea
I read and listen to podcasts about the impact of the COVID19 health crisis on the economy for 30-40 days, at least 2 hours a day and I hope it doesn’t turn into an obsession…
Rather, it has to do with the curious way I am used to looking at the world and the lack of precedent in such a situation. Of course, the Spanish flu was a similar event, good to consider, but there are two reasons that make it less relevant: the fact that the accuracy of records is affected by the 100 years since the event and the fact that the global economy today has everything else springs and inter-dependencies.
A crisis that affects the health system so abruptly – that suddenly and fundamentally hits the generation of value and product in the economy, that stimulates deep personal fears, that throws people into a state of forced introspection and that erodes the way we conceive work and social relations – it’s such an original and profound crisis, you don’t even know if you have reason to be happy that you have the chance to live something like that or to think that you were born in the wrong century.
Jealous of sociologists and anthropologists because they have the chance to study something like that, I limit myself to my condition as an entrepreneur and I try to understand the economic effects. Overcoming the hesitation of some to understand that we are facing an unprecedented economic crisis (and I am referring to the strictly economic aspects of the crisis in the following), I am glad to see that the vast majority of people understand that things are not they still have to look good from this point of view. Assessing the moments and depths of the blows that will come is important when you have the responsibility of thousands of jobs and you are pressed by the need for strategic decisions and moves in such a situation.
60 days have passed since the crisis in Romania and even more if we look at the global situation. I understand the shock and the initial lack of coherence of the authorities towards the economic perspective of the crisis initially generated by the sudden cessation or slowdown of activities. I understand because running a company for over 25 years I know that you could not be prepared for such a thing and that it is human to hesitate, to deny, to even make mistakes. Some over-reacted, others were determined and quick to allocate financial support, others were careful and thrifty, but most hesitated and delayed. I understand! From V-turns to despair, however, there is a long way to go and somewhere between the two is the way to go.
The global economy is already in a crisis… I would say about old age, accumulated shortcomings and garbage under the rug. The recession was quiet, and consumption had begun to sway. Then: boom! Pandemic! Tense world relations, the ongoing oil crisis, I would add the global issues of leadership and trust, have not helped us to meet this crisis in good shape, materially and mentally prepared. Of course, I expected solidarity and a focused response globally, to coordination and help. Unfortunately, we witnessed isolation strategies, a diverse and misaligned response, and additional quarrels.
But 90-60 days passed, the surprise passed, time allowed us to organize, the experiences of others proved their effects! We? In the same state of misalignment and lack of support. The lack of clarity and certainty regarding the economic measures seriously affects the economic environment in Romania and unfortunately there are no signs of improvement.
In such a situation, what will determine the severity of the crisis is mainly related to consumer sentiment. The risk of exacerbating fears and the spiral of mistrust is what could turn the support of any size of the state into crumbs for pigeons. The deflation generated by the decrease in consumption will turn any state loan into something impossible to bear in the short and medium term. Mitigation methods? Communication based on clarity, authenticity and accompanied by facts. Empty words and legislative juggling do not use…
The economy needs certainties! It may be bad, but there is nothing worse than lack of perspective! Entrepreneurs and shareholders have a wide range of responses to a crisis, and uncertainty is something they know how to deal with, but it does not generate the kind of response the state needs now!
Consumers, on the other hand, can bear a lot and sacrifice is one of them, insofar as they understand what it consists of and how long it lasts. Kind of message: it’s good, don’t be scared, it’s nothing serious – it doesn’t go from kindergarten upwards.
We need a plan and realities, we need certainties, too much time has passed!