Is The Global Recession Just Starting?

Published June 16th, 2020 - 08:29 GMT
(DALE DE LA REY/AFP/Getty Images)
(DALE DE LA REY/AFP/Getty Images)
Highlights
There is no doubt that the coronavirus (COVID-19) shall remain with us for a very long time, and consequently, its negative economic impact shall remain to haunt us too.

Allow me in this article to propose several ideas in facing the largest global depression in the history of the world. Since the way out of this crisis is going to be long, arduous and painful, it is important that we all participate in the search for more effective ideas, stemming from our respective positions, but based on the common belief that we are still at the beginning of the road.

There is no doubt that the coronavirus (COVID-19) shall remain with us for a very long time, and consequently, its negative economic impact shall remain to haunt us too. Therefore, countermeasures to protect the economy and the society should not wait for the epidemic to end; we should always be ahead of time.

Since the economic crisis that I expected to happen in 2020 has been gradually developing and it continues to grow in the midst of our battle against the Coronavirus, it looks certain that it will lead to the greatest depression known to mankind, in comparison with the 1929-1933 Great Depression, by the end of this year. 

It is crucial for each country to formulate the appropriate plans and strategies to face this major challenge. A report issued by the International Monetary Fund states that overcoming the crisis depends on the measures taken by each country. 

I believe that we need an immediate economic rescue plan for 2020; followed by another extended plan spanning until 2025. One main principle in each plan should be guided by the national interests of each country, particularly the concept of self-sufficiency.

An advisory council 

for the head of the state

I understand that each country has its own unique set of circumstances and considerations. Therefore, I do not claim that I am able to offer a tailored proposal for each country, because the decision makers and experts in the concerned countries are better qualified to do so. 

Leaders of each country may find it appropriate to establish a team of experts that brings together a team of government officials, businessmen, academics, and civil society to address the situation:  “A Team to Confront the Greatest Depression in History”. The team will act as an Advisory Council for the heads of the concerned states to help them decide on the most appropriate courses of action. 

The council would in a suitable environment study and provide suggested solutions to a host of key topics such as digitalisation, transparency, more training in addition to others. 

For example, the council could propose alternative ideas that exclude the imposition of new taxes; taxes that that hinder the required recovery. In addition, taxes on new investment projects in agriculture and medication, and all other useful manufacturing industries should be removed, whilst providing these industries with the required level of protection, until the State reaches adequate levels of self-sufficiency. 

Transforming into digital State, including services, education (especially digital learning) and e-government, should be a top priority. 

Adopt policies to stimulate the growth in productivity (GDP) by enabling profitability of national companies in order to create more job opportunities. This government tax revenue will increase naturally without burdening the individual citizen in addition to adopt policies and procedures to control prices and combat inflation. 

A transparent relationship between the government and the people is crucial to enhance confidence, and allow the economic sector and the citizens to participate in decision-making process. The coronavirus crisis has proven that citizens accept, cooperate with, adhere to and respect authorities’ decisions, especially when it is in the interest of society and the citizens. Confirm sovereign and absolute commitment to preserve the freedom of movement of funds. 

Rather than making payments to the unemployed, obviously to help them pass the crisis, it is better to adopt a programme of helping troubled business firms financially so that they can recruit the unemployed and pay them while participating in the production apparatus rather than paying them while idle in their homes; encouraging training programmes, internships, for the purpose of employment, away from the strict terms and conditions of the Labour Law, on the basis of mutual consent between the company and the trainee.

Adopt an administrative reform plan with particular focus on cutting spending, in addition to restructuring various government sectors, which will lead to a restructuring of policies and regulations such as energy policies in addition to tackling the privatisation of various government institutions if this would lead to an increase in the efficiency and the profitability. Also, reviewing and developing international agreements in order to secure the real interests of the State is also crucial. 

Tourism is a vital sector and the impact of COVID-19 was and still harsh on this sector that is why I believe there is a need to adopt programmes to support the tourism sector, which would lead to substantial growth in the gross domestic product and would positively adjust the trade balance.

And we should not neglect the educational sector.

Creating a centre for competitiveness hosted and funded by an educational institution is important and so is focusing on investing in innovation, because creating knowledge is the way to creating wealth. 

I may conclude by reiterating that experts in all Arab states are aware of most of what I have proposed. This, however, should not discourage active engagement in the debate that may help economic experts and subsequently leaders to take the right decisions.

Talal Abu Ghazaleh is a well-known international businessman who is a columnist in the Jordan Times.


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