In the early days of the coronavirus outbreak, we wrote about and envisioned what the situation would be like if it were not quickly eradicated. Our analysis was from an economic perspective, and what we predicted came to pass exactly as described, along with its impact on economic and real estate activities. Some commented on what we wrote, calling us illogical and expressing surprise at our analysis. Today, everything we mentioned is coming true, and we appreciate everyone’s interest in following the newspaper.
Now, following the recovery and the gradual resumption of activities, what can we expect? There is no doubt that the shock of the pandemic’s spread affected everyone, hit the economies of major countries, and had a profound impact on all sectors; it affected—and indeed disrupted—people’s livelihoods. Hundreds of companies lost their wealth, and hundreds of thousands lost their jobs, and the specter of unemployment has become a major concern for policymakers in most countries.
The world has changed, ways of thinking have shifted, and the wave of recession has become global. According to forecasts, we will witness a prolonged recession lasting for years, until the world recovers or forgets what happened. The drop in energy prices has also affected most countries that rely heavily on it for their income, and these countries have adjusted their domestic policies by imposing taxes, fees, and regulations, while developing new systems and incentives for exports and tourism to help alleviate the pressure on them and diversify their sources of income.
The prolonged decline in revenues and the global economic slump will continue for years. Global markets will open up and restrictions will be eased to revitalize them, but what will the economic cycle of local activities look like?
When we see some restaurants or cafes bustling with activity, this does not necessarily signify prosperity or a return to recovery, as some might imagine. Most of what is served there is imported, either directly or indirectly, including meat, tea, coffee, fruits, vegetables, labor, and other goods such as clothing. The income of most of their customers comes from the public sector, and most of what remains from the private sector also relies heavily on that sector.
This economic cycle drains vast sums of money abroad, so where will our income come from?!
We really need to think this through, because when the revenues of the larger cycle from abroad are affected, the pain will be very severe; no matter how much we take from the smaller cycle, its resources will eventually run out, and the wheel of growth will gradually weaken.
Citizens are the first to be affected, and they must be more rational in their spending, focusing on necessities, given their low income and the rising costs of goods and services, until the balance shifts and there is greater abundance and more options, price increases stop, and inflation begins to fall due to a lack of purchasing power. Therefore, in the coming period, we need to be frugal, avoid waste, and save as much as we can, because the years ahead will be much harder than we can imagine, as the price of everything has risen, and money and cash are the lifeblood of humanity; any disruption to them increases the pain, and it is difficult to remedy except with pain even greater than that.
