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ECONOMY

Rapid Adaptation Must Be Core Of Our Collective Response, Fiscal Council Chairman Says

Rapid Adaptation Must Be Core Of Our Collective Response, Fiscal Council Chairman Says

Rapid adaptation must be the core of our collective response, Fiscal Council Chairman Michalis Persianis said addressing on Friday the 12th Limassol Economic Forum.

Chairman of the Cyprus Fiscal Council Michalis Persianis spoke of the impact of the pandemic. Through the pandemic financial markets have not only seen a boom, but have also shown extensive distortions, with wide displacements of investment away from productive destinations, he said.

Financial markets are raking up the excess liquidity into unproductive purposes and continue to act as a secondary boom to inflation, which continues to accelerate, he added.

At the same time, while capital has remained seemingly unscathed, he noted, productive capacity has been affected with supply-chain bottlenecks and price shifts affecting the entire production cycle.

Referring in particular to Cyprus, Persianis said that double-digit inflation is noted in transport and housing, already with both investment and consumption changes in these areas looking increasingly likely to soon spill over into other parts of the economy.

“Shortages are quickly becoming a reality in Cyprus, in some areas like agriculture” he added.

At the same time, the Fiscal Council Chairman said, both employees and consumers have also changed habits and preferences.

“We are seeing unprecedented resignation rates, especially in lower-income jobs. We are noting lifestyle spending on the rise at the expense of both real economy investment and savings, with Central Banks picking the slack to keep financial markets loosened,” he noted. And, he added, “we are seeing relative price levels between goods and services shift to new patterns, with a significant impact on demand and profits in entire industries.”

He also pointed out that the pandemic has not changed, either our technologies, or the way we use them. However, he said, even as the patterns of 2019 are still in place, we are observing an ever-increasing pace in the development and maturity of these patterns.” This pace, he added, “is coming close to the point of vertigo.”

He said that “the speed of change in consumers, on the supply side, on behavioural patterns and even on investor preferences, is truly shocking in some respects.” And, society, he added, “is also changing before our eyes in ways that may have been anticipated, but are faster than almost any time in history.”

“We do have options and choices, especially if business treats the social and technological change of the last 24 months as the immense opportunity that it truly is, adjusting, adapting and making the best of the New Consumer who is emerging from the COVID crisis” he stressed.

Persianis noted that “the political leadership has also produced meaningful responses, seeing the situation as a unique opportunity to push for more sustainability.”

We are seeing, Persianis noted, “that the unprecedented speed of change is met with an equally unprecedented push for adaptation – and this rapid adaptation must necessarily be the core of our collective response, whether it starts from Brussels or closer to home.”

Source: CNA

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