The Different Shapes of Economic Recovery!

Leo Olivero

Economic Consequences of Shutdown Hardest to Overcome, Says Picardo

Public health, was quite rightly, the primary concern during these early days of the pandemic and for that, the Gibraltar government has already received the praise it rightly deserves for prioritizing the health and safety of its citizens above all else.

As business activity progressively ramped down, this characterised by the negative impact experienced as “significant,” and with industry and businesses worried they could easily face going under or out of business if revenue losses continued and still continues trending down. All this after entering Phase 5 of the Unlocking the Rock programme devised by Government.

As expected, business impacts added up fast as the government tried to slow Covid-19, declaring first the states of emergency, banning mass gatherings, closing bars restaurants and barring cruise ships and all the rest readers already know about.

The Covid Emergency Liaison and Advisory Committee (CELAC), was an excellent idea having the benefit, support and advice of the Unions, the Chamber of Commerce and the Federation of Small Businesses, including the Gaming and Financial Services industry who collectively put their heads together and came up with measures to protect employment and businesses.

But as Chief Minister Fabian Picardo said referring to this point in the unlocking document:

“the economic consequences of the shutdown of our society will likely be the hardest to overcome”.

I kind of concur with the CM on this. As much the stimulus package helps, the economy will depend on how sharply business drops off and how long the downturn lasts, something that at the moment does not appear to be going well. I cannot say this was expected, because I do not know what was actually expected at this stage?

Disturbing Trend of Redundancies Already

However, what I do know, that a disturbing trend of workers are already losing employment with an increasing rate of redundancies, that has spiked in recent days. This, leaving a grey economic forecast at this stage and where I also tend to agree with the comments made by Unite National Officer Stuart Davies a few days ago who warned of ‘difficult times ahead’ which could see a ‘tsunami’ of job losses’.

How Economy is Shaping Up?

Looking at the vast numbers of economic predictions going around generally. Economic experts now seem to favour forecasting the shape the economic recovery will take once the Covid dust settles. Take your economic projection pick, from a ‘U, V, W, Z, L, J, Swoosh, inverted square root’ are what economist think will be the economic shapes to watch out for. Looks economically confusing, you’d be right, it is!

Though national debt may not be seen today as a constraint, governments everywhere are still seeking to contain the pandemic and prevent an even worse economic recession. On the bigger picture, it may be seen as such by financial markets, credit rating agencies, and possibly some governments.