Less than two months ago, the economic forecast was that though the situation could have been better, still Europe and the rest of the world could expect economic growth that would be sufficiently positive to sustain businesses as well as jobs. Problems were arising mostly from the controversies between the US and countries like China which had generated confusion and uncertainty, as well as from worries about how environmental targets to control global warming could be reached.
Today, forecasters are in disarry. The corona virus pandemic has crashed in a big, unexpected way and with phenomenal speed, into world economies. There has never been since the end of the Second World War such a disastrous shift in how countries operate: so we are told.
Historians will decide later whether this is true or not. Certainly though, it is no longer possible to have reliable forecasts about the coming future for we find ourselves in a situation for which no precedent exists. So we are given estimates for how most or how least national economies can be impacted with ranges so wide between the best and the worst option, that frankly they are meaningless.
Really, nobody can yet predict how it will all end.
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LACK OF HARMONY
The eurozone has remained locked in its own tensions – between countries which support strong measures undertaken on a European basis, to provide mutual economic support; and those other countries which are not prepared to back such a commitment before the economies of all members involved follow policies that are on the same page.
The latest controversy between the two camps concerns the measures to be undertaken in order to curtail the economic and financial effects of the corona virus pandemic. As of now, the most signficant measures came from national governments and the European Central Bank. Nordic countries, including Germany fear that southern Europeans will ride on the corona virus “excuse” to reap new European funds coming from the north, while continuing with lax financial management instead of implementing necessary “reforms”.
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SEQUENTIAL INPUTS
If the government really intends to introduce gradually and sequentially measures meant to contain the adverse economic effects of the corona virus pandemic, then it is proceeding on the right lines. Since these effects are still not completely wellknown and understood, and since we cannot forecast how long they will endure, it is prudent to reserve action according to how circumsntaces shape up. And one should stand ready to change or reinforce any move about to be made according to changes in circumstances.
Naturally, people who do not carry the same decision making responsbilities that the government does, find it easy to shoot off the most elegant solutions, even if they lack realism or hardly reflect well actual needs. What’s important is getting applause.
On the other hand, the government too needs to be precise in the aims it sets out while following the sequence of measures being progressively introduced. It must be just as precise when it then explains what it is doing.