In recent months, many people have been questioning whether national economies are on the road to recovery and if our financial fortunes are about to improve. While there is no definite answer to questions like these, experts are always quick to offer their professional opinions on such matters and there has been a great deal of speculation that 2013 will be the year that the global economy begins to recuperate from the devastation of the most recent economic crisis.
However, there are also many experts that suggest the economic downturn is far from over. So who is right and how can we tell?
When answering such a question, it’s also important to examine what form recovery will take and what it will look like. After such an enormous shock to the economic system, there is no doubt that national economies, as well as the global economy, will return restructured and operate in different ways than before.
The most obvious examples of this are the austerity programmes that have been implemented in many countries. These have stripped back the public sector in most nations, removing a great number of society’s most basic security nets in the process and opening up services usually supplied by the state to private companies.
Potential Return to Recession
It is also vital to consider the fact that what may appear as economic recovery could just be the prelude to a return to recession. As Phil Smith, a Partner at pre pack administration experts Moorfields Corporate Recovery, a firm which carries out pre pack administration and company voluntary arrangements, among other business turnaround services for struggling businesses says; “The environment many businesses are operating in this year is extremely tough.”
Though governments have taken drastic measures to halt and reverse the economic slide, they don’t seem to have been overly effective and there’s no guarantee that recession won’t return.
Certain Parts Of The Economy
When dealing with complex issues, it is often the case that explanations are simplified to a point at which they no longer paint an accurate picture of realities. This is often the case when discussing whether the economy will recover or not. It is all too easy to conceive of ‘the economy’ as a single coherent thing, rather than an abstract concept, and be forced to choose between it recovering or deteriorating.
Instead, it’s much more useful to look at the problem and accept that some parts of the economy will continue to suffer and deteriorate while others will recover. Some companies will have to continue to deal with insolvency, while others will prosper. While parts of the economy will recover in the latter half of the year, others won’t.