A financial tsunami smashed through the world economy this month, sweeping away Wall Street titans and sending shock waves through Europe, Asia and Emerging Markets. The Hungarian stock exchange took a massive hit, dropping 40% this month. All Central European economies are affected, and analysts are asking aloud whether the region’s 10 year boom may be over, and whether the introduction of the Euro may be delayed in some markets.
It’s a confusing situation, and only when the flood waters recede will we understand how our economic landscape has been altered. While many speculate about technology recession, Google’s spectacular 3rd quarter results seems to suggest online marketing budgets are resilient.
I’d like to hear from nowEurope readers and contributors. What signs do you see? How will this recession affect your business, and what steps are you taking to meet the challenge? Please use the comments to let me know what you think.
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I think there is going to be a huge crisis if we do not win back the confidence in (business) finance. If banks and companies stop granting loans to each other this will reduce investment actions so that a lot of people will lose their jobs. As a consequence those people finally have less money to spend… this is in a way a vicious circle!
I’m also afraid of such a vicious circle.
I hope that the turbulences of the financial market ends in some month. However the recession is just to begin.
In Hungary the first bad news arrived from companies. Eg.:
- reduction of working dyas from 5 to 4.
- reducing the number of shifts from 4 to 3 or even 2.
- laying of workers.
In the other hand the EU funded infrastructural investments are to be delayed, since the banks are not granting loans at the moment.
I read two articles today that suggest the economic chaos isn’t over. The Global Economy Matters blog suggests that Hungary is facing a deep recession:
“Hungary’s agony has simply dragged on and on all this week with both currency and stock markets falling sharply while bankers continue to report acute credit shortages. At the same time contagion has started to extend its ugly reach right across eastern Europe, with Ukraine, the Baltics and Serbia (at a minimum) all in ongoing negotiations with the IMF, as the credit crunch which followed in the wake of the latest bout of global financial turmoil really starts to bite.”
Meanwhile, Slate published an article suggesting economic chaos is spreading in the developed world and could even be deliberately used to destabilize governments:
“If you wanted to destabilize a country, wouldn’t this be an excellent time to do it? If Country X’s stock market can crash following the publication of a single article in an obscure newspaper, think what might happen if someone conducted a systematic campaign against Country X! And if you can imagine this, so can others.”
Beside all the negative effects we all fear I guess the crisis will also mean a new companies will emerge. These “born in trouble” firms will have low cost structure and will provide customers with value they need.
I like Richard’s point. And building further on that I’m encouraging you to read 10 reasons startups love recession by Juri Kaljundi. I like most the 8th - stupid ideas get less funding, more is left for you.
BTW Juri is one of the few successful ICT entrepreneurs from the new member states who expanded with his business (CV online, already sold) Europewide. He was one of the first foreign speakers at our First Tuesday meetings in Prague (my interview with Juri in Czech).
I’m studying in Budapest during this difficult period and for a matter of fact I’m starting to write about the economy in Hungary.
Obiuvsly the crisis had created a dramatic scenario, but on the other hand I think that the strongest companies will be able not onnly to survive, but also to improve their production and to become more important in internal and external market.
The mass media’s task now, may be try to avoid the panic.