OPINION

Editorial

The International Monetary Fund’s forecasts on global economic prospects, which were released yesterday and which include an assessment of the impact of the devastating terrorist assault in the USA, also reflect the concerns of economic predictions before the disaster. The signs from big and emerging economies alike were not encouraging – and were mirrored in the nervousness and prolonged downward trend in share values. Concerns over the short-term future deepened in the wake of the US carnage, both because of the fears they raised but also because of ignorance over the extent, the duration, the cost and the consequences of the nascent American countermeasures. In this light, both the IMF and the majority of American economists foresee a drop in economic activity, although they still express their belief that the recessionary trend will be short-lived and have only a moderate impact. Commentators point out that the economic slowdown and the deep concerns over the economic crises on the periphery had also been expressed prior to the attacks. In the wake of the terrorist assaults, the downturn is being reinforced by a drop in consumer demand, which plays a crucial role in economic growth, especially in the USA. It is indicative that the transport and tourism industries, which together make up 5.3 percent of US GDP, are already under intense pressure, which has resulted in a wave of layoffs and anxious calls for state subsidies. These remarks are, of course, accompanied by a reminder that the economic base remains healthy and that there are well-founded expectations for an eventual return to growth. Yet prospects over the near future remain dim, and in the modern economy, where consumer and investor sentiment often weight more – in the long term – than firms’ net positions, the present climate may have a worse impact than what is now being predicted. In this light, the government’s repeated assurances that national growth will be double the EU average does not serve the national interest. Citizens need to realize that there is no reason to panic or to be unduly pessimistic. But both the citizens and, above all, the government need to realize that times are hard and that problems require vigilance in order to be solved.