It’s almost the sixth month of the year, and we’re still trying hard to wrap our heads around the scale and scope of the global impact of the Covid-19.
With billions of people around the world still under some sort of lockdown, and more than 200 countries affected, and the number of new cases and deaths growing significantly, a second crisis seems to be rearing its ugly head — in the form of another great depression.
In as much as we want to leave this crisis behind as soon as possible — to go back to our social and economic life — we must give optimum focus on public health. However, it comes at a high price.
Government and business collaboration — working with the latest scientific evidence — is our best bet in preventing this short-term recession from becoming a great depression.
Governments and big corporations who can bend the curve can carefully start initiatives to get part of social and economic life going again, monitored by public health officials of course.
Signs that signal an impending economic
A) Increased unemployment rate
An increased unemployment rate is usually a common sign of impending economic depression.
B) Rising inflation
Inflation can be a good sign that demand is higher due to wage growth and a strong workforce. However, too much inflation will discourage people from spending, which can result in low demand for products and services.
C) Declining property sales
In a stable economy, consumer spending is usually high, including the sale of homes. But when sales of properties start to drop, just like currently is, it may signal an impending economic depression.
The two supportive strategies to help prevent further growth of the virus, which will enable governments to make decisions on how to restart social and economic life, and steer us away from an impending depression include serological testing and rapid antigen tests.
Here are some of the ways to prevent another economic depression
1. Expansionary Monetary Policy
The policy involves cutting down interest rates to encourage investment and borrowing. When the interest rates are lower, consumers will enjoy more value for their money and will be motivated to spend more.
2. Expansionary Fiscal Policy
The policy involves increasing government spending, reducing taxes, or a combination of both. With a tax reduction, it gives consumers disposable income, which, in turn, encourages spending.
3. Financial Stability
This involves the government guaranteeing bank deposits, which will promote the credibility of banks.
The world has managed to keep an economic depression at bay for decades. However, there’s always a chance for it to happen again if all sectors of the economy and countries do not work together to prevent it.
4. Serological Testing
This is simply looking for specific coronavirus antibodies in the general population. In doing this, you can check the fraction of the people that have been in contact with the virus and may be immune.
5. Rapid Antigen Tests
This has to do with developing a reliable test system to quickly diagnose people who carry the virus, without or with light symptoms, and install contact tracing to effectively identify contacts of infected people that could be quarantined to prevent further spread.
Combining all strategies may be the best chance of getting the economy running again. The sectors they choose to get running first between opening schools, workplaces, shops, and restaurants, should be a choice left to the individual countries.
As soon as best practices become clear, countries should be willing to learn and coordinate with each other. The only way to get out of this is to work together. To know more about how your company economy is affected by Covid-19 pandemic, it’s important for you to consult an accounting agency. They will provide you with a clear record and ensure you take the right steps in recovering from this economic slope. For more information, feel free to get in touch with us.