26 Jan Money Talks #3
MoneyTalks is a project started by the students in MoneyFEST Committee (Transylvania College). Every week we will highlight the most important and relevant economic news, both national and international. We hope that the following article will help you understand and discover events you were not aware of, or deepen your understanding of already known topics.
How is Omicron affecting the global economy?
Naturally, as new variants of the Coronavirus appear, people become increasingly scared of the impact that it has on us and the economy. So, when Omicron was discovered, it almost started to feel like the early days of the pandemic all over again. Stock markets around the world fell by 5% because of the fear that investors had with restrictions and the overall decrease of the people’s want to spend. In addition to this, oil prices dropped by 10 dollars a barrel. This is important to note, as oil is a great indicator of how the economy is doing.
However, the effect that Omicron had was much better than expected. Currencies such as the dollar and yen actually strengthened, oil prices saw new highs and global stock markets actually sold off in recent days, reaching the same level they had in November.
So, what can be learned from this? Should people keep fearing the Coronavirus and put off investing in what they want to invest? Should we continue to fear that we might face an economic recession because of this virus? Even though we not might yet hold the ultimate answer, current situations dictate that we should all keep a more positive attitude about what is to come next. (Petra Simpalean)
Can you live off of minimum wage in Romania?
According to a recent study by Picodi.com, Romania comes in 32nd place out of 64 countries when it comes to the cost of food needed to survive, in relation to the minimum wage. The research took into account only the countries that have a minimum wage set by the government and it was based on the net income.
After calculating the minimal nutritional requirements for an average adult, it was found that meeting those costs 343 RON per month, which indicates 22.5 % of the net minimum wage. The study covers a small part of what an average adult actually spends money on monthly. It only focuses on nutritional needs and does not mention utilities, clothes and other expenses, therefore we cannot conclude that you can live comfortably on the minimum wage. (Beatrice Isaila)
China’s birth rate: not a problem for the economy
China’s birth rate is decreasing despite the government’s effort. Last year, the 10.62 million births barely exceeded the number of deaths, meaning that the population will soon start to diminish. The low population growth has made the government worried about China’s economic growth.
When Deng Xiaoping took over political control in 1978, China’s economic boom started. He launched the tolerance of entrepreneurship activity and this led to massive industrialization. The period of China’s rapid growth came, because of population migration not from the population growth. When people moved from the rural areas to the cities, their productivity increased. This increase led to higher wages because businesses competed with each other for the workers.
That is not to say that all hope is lost. China’s economy could recover, but it would require the government to give up control over the economy, even though the growth will never match the one achieved in the past 40 years. (Maria Rondolean)