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Daianu: By end of year, beginning of 2023 we will enter post pandemic cycle
Entering a post pandemic cycle could take place by the end of the year, beginning of 2023, especially if the vaccination rates will be at high level and a quasi-general immunization will be reached, says Daniel Daianu, the president of the Fiscal Council.
“We can speak about a post - lockdown cycle, which started at the end of 2020, even if close downs and partial re-openings take place until clearly getting out of the pandemic. We will enter a post pandemic cycle possibly at the end of the year- beginning of 2023, especially if vaccination rates will be at high level and a quasi general immunisation will take place,” said Daniel Daianu, in the article “GDP in pandemic: a reduce information relevance?”, published on the Internet page of the Fiscal Council and on the blog OpiniiBNR.ro.
According to the president of the Fiscal Council, “life has deteriorated in pandemic, and human lives mean suffering for families, losses for human treasure,” and these losses, next to the evolutions noted in the article, have “a lasting impact on potential GDP.”
“Irregularities in supply/manufacture chains led to bigger transaction costs, poverty cohabitation and surplus in markets,”said Daianu.
Also, the president of the Fiscal Council mentioned the deterioration of the education process, which affects economy/society both as a flow creating human capital and as human capital stock.At the same time, he mentioned the negative impact on public health, with long term effects.“Let us think about “long Covid”, which affects especially non vaccinated persons,” Daianu pointed out.
In his opinion, work from home pointed out the redundancy in labor market, in the activity of private organizations and in the public sector – because the same economic result can be often obtained with fewer results. This observation can lead to multiple restructuring.
The president of the Fiscal Council mentioned the reorientation of many people's preoccupations for Internet use either in order to forget about the pandemic or to play games or perform stock market operations.
According to him, it is possible that many people could have rediscovered Gutenberg galaxy, to get better informed/educated when they stay home.“But there is also a large scale idiocy when the Internet is invaded by fake news, vulgarity, immorality, etc, when tunnel type thinking, intolerance, extremism develop. This last consequence can be considered as man's degradation with impact in human capital,”he added.
The economist pointed out that pandemic deepened social/economic cleavage, pointing out more cognitive and cultural dissonances with reflexes in social and political life.
“Long term effects can be more and more ugly. Pandemic has weakened the act of governing in the world, has reduced the degree of confidence in public policies. Hence the resulting of sub optimal measures, which were slowed down anyway, as a process, in conditions of great uncertainties and volatility. It is true that a wrong governing cannot be directly measured in GDP, but there are effects which go into statistics. In essence, it is GDP which would have exceeded the pre- pandemic level at a certain moment (in 2021 in Europe with differences among states), it concerns an inferior aggregate satisfaction,” the president of the Fiscal Council explained.
Daianu points out that the deterioration of living, occulted by GDP as this indicator is measured, is not reduced under inflation. The latter is seen in the difference we make between nominal GDP and real GDP.
Daianu says that inflation affects different categories of citizens according to the distribution of incomes and consumer goods and various services.
The president of the Fiscal Council says the shock of energy prices which produces disturbances in people's lives and in production can be hardly be captured by GDP.
“Consequences of this shock are big at home and in relations among states,” Daianu showed.
At the same time, the impact of climate changes, with the change of the relative price for energy (at least until renewable energies hold the larger part in the energy source portfolio) will massively influence economic activity, production structures, he said.
“We should resume the question: when we statistically find out that GDP has returned to the pre-pandemic level, can this fact be equal to economic recovery? I think not, not only because GDP itself has interpretation insufficiencies like the ones suggested above. When pandemic still holds society under siege, when restrictions are in use, when people wear protection masks and when there are many deaths caused by Covid 19, it is difficult to speak about economic recovery at pre pandemic level,” Daianu said.