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Leonardo Badea (BNR): Economic reconstruction must also target the future, not only the present
* Leonardo Badea is Deputy Governor of the National Bank of Romania (BNR)
“Our society, as we know it today, is at a moment of decision being at an evolutionary crossroads.
The trend of worsening social inequalities has been manifesting for a long time and as most long-term developments have accelerated in recent years due to globalization, the increasing degree of automation of activities, much faster amplification of the complexity of financial markets and products compared to the pace of improving financial inclusion, as well as the effect of the recent crises of 2007-2012 which were followed by a weak global economic recovery. Thus, the current crisis generated by the COVID-19 pandemic is only the latest factor in increasing these inequalities and exacerbating social tensions.
We can see that decades of economic policies based mainly on ideology instead of pragmatism have failed. The idea that markets can solve all economic problems on their own has made our society, although very complex, just as fragile and vulnerable. There have been times when this, especially recently, has become increasingly apparent to all participants in the economy. An example would be the access to healthcare during the COVID-19 crisis.
Romania is among the states where, even during the peak of the medical crisis, infected people had access to free specialized medical care (with some deficiencies inherent under such an exceptional situation, but these are the exception and not the rule), but there were also many countries where low-income people have suffered much more and were significantly more exposed to the effects of the disease compared to those in higher income categories. It was perhaps the result of a slightly reduced virulence of the disease, as also found in some of the neighboring countries.
Although at present we do not know exactly how the current pandemic crisis will evolve, we can see the increasingly visible appearance of its indirect effects to the economy, society, access to education etc. Studies show that in recent years epidemics have contributed to worsening inequalities. From what we are able to understand now, if we do not act wisely and decisively, through a concentrated and correlated effort by all parties involved (in the public but also private sector), we risk that in this regard Romania will not differentiate itself positively, as it did so from the perspective of access to care and treatment for COVID-19.
Thus, there is a need for Romania to use this moment as an opportunity for future-oriented economic development, aiming at expanding new business lines and encouraging strategic areas where we can be efficient and internationally competitive, as for example the information technology, agro-food industry or transport sectors.(...) ( This article will appear in full in our Financial Bulletin, on Monday July 13)