How to prepare for the crisis

The impending crisis caused by the coronavirus pandemic leaves no one in doubt. The question arises how to prepare for the coming recession?

First, let’s summarize the basic facts. The state of emergency as it was in the spring is now in the game again, it is not possible to say whether it awaits us and to what extent. In the spring months, the state of emergency led to the closure of the economy and an increase in the state debt by 500 billion crowns. In the case of an autumn lock-up of the economy, a lockdown, as this phenomenon is also called, would increase the deficit by another hundred billion. The second round would again have an adverse effect on households, companies and the state.

According to initial estimates, gross domestic product is expected to fall by up to 15 percent year on year. Unemployment reached 3.79 percent.

Spring experience has shown that a second closure of the economy would also be expensive. For this reason, too, politicians do not want to cling to it as a mantra that will solve everything. Thanks to that, the second wave, which is now swelling and hitting the Czechia, will be more insidious.

Medically gratefully, the increase in patients with covid-19 means, above all, panic, which is provoked by people’s actions. The Czechia is thus heading for an anarchist lockdown, which is a wild lock based on the behavior of the crowd, but without political intervention. It is an uncontrollable situation caused by panic.

The population across the republic takes various measures, especially in terms of restrictions on free movement. The number of unnecessary and unnecessary trips – for example to work or to shops – is reduced. At the same time, the economy is cooling down. The autumn’s second wave of the pandemic will highlight the spring closure of the economy.

Low to no savings

The spring emergency showed how fragile the Czech economy is – especially in terms of working capital of companies and household savings. Less than half of Czechs have a financial reserve for a month. In a country where over three million people do not have savings of more than 10,000 crowns, this is not surprising. The companies weren’t very good either.

What’s even worse is that with the autumn’s economic stalemate, it’s hard for anyone to do anything hot, who already had financial difficulties in the spring. Autumn will also be a hard time for him. The ending moratorium on banks on loan repayments will be exacerbated by complications. In addition, the Czechia is facing another wave of redundancies – regardless of the exchange rate.

If you hold a financial reserve, you have partially won. Still, think twice about spending more in the fall.

For others, there is an important rule of saving.

Spending will stop

Incoming information from the media, as well as the practice seen with your own eyes, show that the economy is slowing down. There are fewer people on the streets, as well as, for example, in restaurants, which are a media-appreciative topic. The Czech Statistical Office will bring hard numbers with a delay of several months.

The breathing atmosphere of fear of an uncertain future will be borne by the reduction of consumption. Balancing households over unnecessary and unnecessary expenditures will reappear on the scene. There will be austerity measures, but not in the form of postponing money for worse times, but in the search for savings in spending.

Preparing for the next crisis

It is difficult to prepare for the current crisis. What you haven’t managed to save yet, you won’t be able to catch up in a few weeks. There is only one great lesson to be learned from the current more tense situation – time and money solve every complication. As soon as you miss one of these valuable commodities, you are in the throes of events and you are unable to respond adequately.