BR Interview | Leonardo Badea (BNR): Romania needs to clarify quickly and commit firmly to those economic areas where it has international competitive advantages or strategic interest

Following a series of op-eds by Leonardo Badea, BR sat down with the Deputy Governor of the National Bank of Romania for an exclusive interview to find out his take on the current economic crisis, its costs, but also the opportunities which could arise from the current context.

If we refer to the current pandemic crisis, paraphrasing, can we say that “this time is different”? Would it have helped us to pay more attention to what the previous crises have shown us?

Associating this famous quote to the current situation is indeed tempting, especially since it resonates very well for the experienced economists who have watched and participated in the debates of the last decades on the causes, manifestations and solutions of economic and financial crises. In fact, in a very recent interview Kenneth Rogoff admitted that we are facing an extraordinary situation for which “it is really hard to think of a historical parallel”.

Even though the majority of probably us agree that “this time is different”, I think we should be careful not to put such a simple label over a very complicated situation. It is in our best interest of finding the most appropriate solutions to exit the crisis to look at its details and characteristics on all sides. They are indeed different from those of other crises that we often remember regarding the cause that generated it and its early manifestations, by the fulminating closure of activities, the sudden collapse of supply and demand for broad categories of products and services, the complexity of the implications of the health crisis on the functioning of the modern economy and society, our inability to understand and reasonably anticipate its future developments and the irreversible transformations that it could cause.

But, beyond these many differences, I think there are also elements common to most other crises of the past, which if we can strive to understand better and that would help us to build solutions and defend ourselves from the effects that will come.

For example, we are facing a crisis of trust from both business and consumer side (so simultaneously on the supply and demand), but this in itself is not new, because both the latest and the most remote economic and financial crises we have experienced have had this component and as such we could lean more towards understanding it. Some tools for restoring trust are indeed specific to a health crisis, but others are generally valid and relate to human nature, to the reaction of an individual placed in a borderline situation that threatens his well-being and personal future, also for his family and community, and these are things that we should and could have learned better from many previous crises, especially how to counteract them.

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Sursa: business-review.eu