Let’s accept it, that, not every intelligent or educated person understands how the world and national economy works. Result: It leaves a lot of people confused when economist and experts, start waring us about a immenient recession.
However most wise people understand how the economics works for them – you have to earn more than your spend and save a little for the rainy day. If you don’t do that then you will soon be wet in the rain. Some simple and hardworking people just know that, they have to work hard every day, earn enough to put the bread on the table and rest their government will take care.
One of my concerned colleagues recently asked me a series of questions, why is the inflation high? why are experts warning us about a recession? why are the stock markets down? why is the real estate market up? is it being caused by the Russia-Ukraine war? Is it the after effect of the Pandemic? Is it due to high rates of attrition across the globe? And what does this mean for us? – Well these are all very serious questions and though they were at the back of my mind, his asking them all together, made me think about it very seriously.
I answered him saying, yes they are all connected to each other. However, inflation (rising consumer prices) and recession (if it was to hit us) is a result a lag factor. The lead factors are the Pandemic, the Russia-Ukraine war, increasing prices of core input materials like oil, gas, steel, etc. as they increase the cost of goods and services being produced. Since the consumer goods and services prices are going up the governments are trying to tighten the fiscal measures such as lending rates and flow of money to bring the inflation under control.
Then in simple terms, I said to him that we as people have to do as follows:
1) Make sure that we all work hard and improve productivity and efficiency at work. Control costs of our business operations and try and mitigate as much of the rising input material and services costs by enhancing our productivity and efficiency. That will help us not increase prices for our customers.
2) Remember, inflation is a hidden tax that we all pay when ever we consume goods and services. Hence, make sure that the wise Asian principle of earning more than you spend and saving a bit for the future is followed more strictly. Asians by nature and habit do not believe much in living off credit to land up in big debts.
3) If you are in a job and you depend on a salary for supporting yourself and your family – this may not be the time to take un-calculated risks. Of course, unless it’s calculated or necessary, just sit tight.
4) Do not give up or reduce consumption of necessary goods and services that you can afford. Spend wisely.
5) Stay away from investing in a declining stock market or a inflated real estate market. Invest if you have to, when it’s corrected and then ride the gains when it starts to bounce back.
6) Try and enhance your knowledge on how macro and micro economic factors work in your country, industry and globally. Loads of easy and free learning material available digitally. Make sure they are from a credible source.
7) Trust your organisation and leaders to do the right thing as they respond to these economic challenges. All good companies and leaders have skills and capabilities of dealing with it. Your positive attitude, extra effort and support will go a long way in dealing with any crisis that your organisation faces. Communicate openly with your family and team members and solicit their understanding and support.