International Trade Blog

The global economic crisis has had a major effect on the economic activity worldwide. Various markets have collapsed and a huge number of people have lost their jobs. So what actually is there to do during a crisis?

When the crisis hit everyone was ready to predict that shops would empty and go out of business due to the lack of customers with any money to spend. Some part of this came true, but only a part. Yes a huge amount of people lost their jobs and thus their income. This had a dramatic effect on the overall economic activity as there simply was no money to spend, but this is true to a certain degree because only some specific type of shops went out of business. We must remember one thing that does not change no matter what – people must eat. So to fulfill that need they must spend the money they still have on seemingly basic stuff like food. This is why only high end retailers experienced difficulties. Of course the number of newly bought cars decreased, but food and basic clothing numbers stayed the same. Actually the crisis did one positive thing it decreased the rather high basic commodity prices that were pushed to unrealistic heights due to the previous inflated economy.

Although currently everyone is speaking about the imminent recovery the economy is still in very bad shape. It may have won the fight with death, but still will need a lot of good doctors to fully recover if that is possible at all. What do we do for the time being? Everything that can be done to scrape by and pray for the glorious return of a healthy economic activity!

Yes the global economic crisis is still governing our minds and while some governments have taken the necessary steps to rejuvenate the economy some only issue bold and reassuring statements, but actually does not do anything. Granted not all countries have the necessary amount of additional money to inject into the economy, but there are always other ways.

Of course not every country is able to invest huge amounts of money into their economy like, for example, China, but nonetheless there are several economic tools which can have a positive and rejuvenating effect on the economy. Let’s take a look at the taxes. Many markets have crumbled and companies have a very hard time to sell their goods. Huge tax burden does not help either and so to cut expenses they have to downsize by letting go employees and thus decreasing their economic activity. The decreased economic activity on its part hampers the overall economic recovery. The best way to fight the economic recession is to drastically decrease such taxes as Income and VAT. While at the beginning it will surely decrease budget income, but as economic activity will increase, due to the lowered taxes’’ so will the income. Sadly many government officials do not see this way. Quite opposite, they are planning to defeat the crisis by increasing income with a substantial raise of taxes. Any half good economist will tell you that this is the most foolish action you can take in such a situation. Nevertheless government official still think that they are smarter than any professional of the field.

We need some drastic moves to be maid to overcome this recession, but these steps must be carefully researched and debated over. In order for any of them to work they must receive acceptance from the general population. Let’s hope that government officials will listen to the voice of reason.

The number of job appointments has increased for the second month in row. Sound like good news? It sort of is, but the overall situation in UK is far from picture perfect.

Although the unemployment level is the highest since 1995 that last two months have shown good promise. While job market is still very far away from booming one positive fact can be mentioned. It seems than the rate of job losses has reached its peak and that means that the unemployment levels will not drastically increase. Even more good news is that there is appearing more and more permanent and periodical new job opening which can be directly connected to the increasing stability. Many companies have understood that the country has withstood the hardest blow of the global economic crisis and has entered the path of recovery. The faster the stability level will grow the faster will the job market expand.

While the statement that the global crisis has been defeated did no actual good for the general population these news give at least a small ray of hope. Now at least the people have something to look for. While finding a good job is still a very hard undertaking at least it is possible no matter the chances. Three months ago this was not so. We have to grab hold of every little piece of hope or otherwise we might crack and give in to depression. Let’s hope that we will receive more and more good news all over the world.

Despite the latest news from various analysts about the end of the global economic crisis the average US consumer still does not feel safe. Consumer confidence is down in numbers in comparison with previous months.

What could be the main cause for this? Yes the analysts say that the crisis is over and predict soon recovery, but in reality the everyday consumer still does not feel the difference. Basically the consumer is completely right because until now the recovery is still a recovery on paper. While different indexes and other economic tools might prove that the crisis is defeated in real life there is no actual change. Salaries are still low and unemployment levels are still very high. There are still no realistic guarantees that the unemployment level will not grow further and many more people lose their jobs. This is actually quite possible as for many countries winter is nearing and this means no more seasonal jobs. The consumers are very concerned about long term income as no one can guarantee that. I believe that the confidence will grow, but it will take some time. If you would ask me to predict I would say that overall consumer confidence will start to improve beginning 2010, but only if the predictions about recovery come true.

Nevertheless there is a positive change in the US market. Home prices are starting to grow. Although they are still far behind 2008 levels this is considered to be quite significant.

Confidence is very important and the only thing that can influence it is stability. The faster countries and the whole world itself regain stability the sooner the consumer confidence will return.

While still a lot of people experience the wrath of the global economic crisis some governments and analysts have already proclaimed that the crisis is over and we are on a way to a recovery. One of these statements was made in UK.

Of course it sounds great and very encouraging, but there are problems with this statement and UK trade union has pointed out these problems, and warns people to be very careful. True some stock prices have shown improvement which means that really there are some positive changes happening, but it is still too soon to speak about a recovery. Well we might speak about it, but then only in theory. How can one speak about a recovery if the unemployment levels are still very high and salary levels so low? The government is sponsored by inhabitants of a country and not the other way round. If the people do not have the money and are fighting with threats of poverty how can we speak about a recovery. Only when these factors will begin to change then it is time to really speak about the end of crisis. But some governments tend to forget that.

Of course we must think positive and hope that we will recover as fast as possible. We cannot rely on some experts who say that now the crisis is over and everything will be good now. This does not happen in real life. We, the simple people, do not care about stock prices and GDP growth indexes, all we care about is quality of life and as long as we have to struggle to survive all talks about a recovery is wishful thinking. I really do hope that the crisis is almost beaten, but on the other hand I am very afraid of what will happen in the course of next few months.

Although the global economic crisis is still roaming around the world, many governments start to issue statements that the crisis is over and recovery is there. Sound nice, but what does this actually mean?

Various analysts all over the world predict total recovery by 2010 and increase of GDP. If it will be true then it is great news for everyone. Salaries will raise, unemployment levels will drastically decrease, the overall quality of life will reach unseen heights. Sounds like utopia doesn’t it? Ok let’s say that the crisis has been beaten and we are on the way to recovery. This really should mean that employers should increase wages, but I do not think that it will happen so soon. It is very easy to cut salaries, but much harder to raise them. That is the simple nature of human beings. Even if the economic situation improves employers tend to be very ‘’careful’’ with raising wages. And why shouldn’t they be? They have suffered through the crisis, had a legitimate opportunity to cut costs be decreasing salaries and now nobody can order them to reset the salaries to previous levels. This means more profit and as the economic situation still seams fragile employees will still be afraid to lose work and obey the employer. So basically we could celebrate the fact of recovery, but we will not receive any actual benefit from it, at least not as soon as we expected.

Granted the unemployment level should improve as companies who have recovered will hire new employees, but then again the salary level will not reach previous levels. None the less this is still good news as more and more people will be able to earn at least a minimum wage to survive and feed their families.

The improvement of the quality of life takes even longer as it is directly connected with salary levels and the overall employment level. Granted the crisis had one positive effect. It decreased the overall costs of food and clothes and some services which previously had reached ridiculous heights.

The general consensus is that yes we can speak about recovery, but only on paper. In real life we will probably experience it only in 2011, of course only if the prognosis does not change and we do not encounter another crisis. Let’s hope for the best scenario.