20 April 2020 03:49 am Views - 523
Back in first week of January, many global scientists predicted that the spread of the new COVID-19 or coronavirus in China would reach a turning point by the second or third week of February. They were right. Indeed, the total number of serious and critical cases in the country has been declining since February 22, and there have been no new cases in the last few days other than international travellers arriving in China.
Unfortunately, new infections outside China have risen very fast, with potentially disastrous consequences for public health and the global economy.
Faced with this pandemic, the policymakers can draw several useful lessons from China and other countries that were among the first to be hit by COVID-19. This is especially useful for countries like Sri Lanka, that have not yet experienced a major outbreak.
Predictions regarding the economic fallout from the COVID-19 pandemic run the gamut. Some people equate the prospects for the world economy to the Spanish flu pandemic. Lasting from January 1918 to December 1920, it infected 500 million people - about a quarter of the world’s population at the time. The death toll is estimated to have been anywhere from 50 million, to possibly as high as 100 million. It was one of the deadliest pandemics in human history. Fortunately, there are others who describe a shock followed by speedy recovery. Let us hope the second prediction may come right.
The effect of COVID -19 is two-fold. first and foremost a public health crisis. Then comes the economic crisis. No affected country can tackle mounting economic concerns if it loses sight of the basic fact that people are getting sick and some of them are dying.
The simple fact is, if a country floods out its healthcare system, then people die of heart attacks, strokes, missed surgeries and trauma. So, the first thing we need to do is mitigate the wave that is occurring throughout the country. To be honest, the Government is active and doing whatever possible. If we can contain this devil without let him go out-of-control., we can begin slowly and easing up on the blunt economic restrictions needed to suppress the coronavirus.
This cautious return to life is already taking place in China, Taiwan and many Asian countries hit earliest by the pandemic.
Eventually, whether it’s in three months’ or one year’s time, we also will return to normal life. Then what next? The post-pandemic economic challenges to Sri Lanka would be real and pressing. Our economic growth in the first half of the year (or the whole year) might be negative.
That is why we need to be concerned about financial stability. Financial institutions will face a liquidity problem, but hopefully, not a solvency problem. The probability of a full-blown crisis like the Spanish flu pandemic, one that sparked the Great Recession depends simply on how long the current situation lasts.
Beneath these macro concerns are deep and various challenges at the national level. If we walk through the plight of the average worker in the Sri Lankan economy, around nine per cent of our population lives below the poverty line and possesses essentially no savings. What does that mean? We need to find answers.
Another growing concern is the terrible blow to small businesses. For example, some survey findings done some time back indicated that industrial establishments below five employees accounted for 84% of total establishments and 28% of total employment, but accounted for only 7.5% in the industrial sector. The survival of these small businesses will determine the shape and nature of recovery.
Therefore, focus on small businesses should be a central theme in our current discussions. While the government will be forced to inject up money into the economy, they need to worry the most about very small entrepreneurs, even single-employee businesses, as they will suffer the most. It’s very important that the money doesn’t simply go down to everybody, but that it targets these small entrepreneurs.
There is one more danger of this crisis. Fighting against COVID-19 is not a solo job. Sri Lankan Government cannot do it alone. For example, even if Sri Lanka may become corona-free by mid-April, the country has to keep on spending a lot of resources to keep the virus coming in from other countries. Until other countries are also stable, there wouldn’t be inward tourism, no outward exports, no inward imports, no inward cashflow whatsoever. So, it should be a global effort.
It is becoming obvious now. Though China may now be emerging from the worst of the health crisis, Europe and the US are not in a position to resume trade as usual. Effectively galvanizing the global economy will be very difficult without clearly coordinated policies across countries
While the Sri Lankan Government is totally concentrating on the scourge of corona, it should focus on “What next” scenario. That means a National Plan of revival. We need not wait until this issue is settled and life returns to normalcy. A Presidential Task-force on revival of post-corona economy would be fine.
Once again take China for example. Beijing is drafting a law to underpin an ambitious campaign to revitalise its rural areas – part of President Xi Jinping’s plan to make China a strong modern country by 2050.
The campaign, initiated by Xi when he started his second term in 2017, marks a shift in focus for the country – prioritising the country’s rural areas over the urban development that has fuelled breakneck economic growth for decades.
Xi’s vision is for rural areas that have prosperous industries and farmers with raised living standards, but not at the expense of the environment, by the time 2050 rolls around. The ultimate aim is for the party to “build a modern, socialist country that is prosperous, strong, democratic, culturally advanced and harmonious” by the time the People’s Republic of China marks its 100th anniversary in 2049. They plan to stipulate all these guiding principles need to be stipulated in legislation.
Just like Sri Lanka, for decades, rural areas in China, where incomes and living standards are significantly lower, have been left behind in the urbanisation drive. Millions of farmers have gone to the cities in search of work in factories, leaving behind their homes, land and children in the care of elderly relatives.
A number of studies done in Sri Lanka, too, have revealed that a vast unbalanced expansion of the development between the rural and urban sectors. A wide gap can be identified with respect to income, savings, expenditure, level of education, language literacy and computer knowledge etc. However, the health situation of the people in both sectors was in a satisfactory level. But in the case of some diseases such as heart diseases, high blood pressure, rheumatism, diabetes etc, it was noted that such ailments were plentiful in the urban areas.
As the rural sector personnel get engaged in work related to physical strain, there can be seen a decline of vulnerability of such diseases. Although both the sectors spend the maximum amount out of their income for consumer food, the amount of the families in the rural sector spend a very low figure relatively to that of the urban sector. The reason for this situation is that they do not get a sufficient income to eke out their living.
The COVID-19 pandemic threatens the world with disaster. But the crisis also offers the Government a rare chance to undertake policy changes that not only address the short-term public-health challenge but also take policy decision how we can find solutions for the rural urban disparities in the country.
The Chinese word for “crisis” (weiji) is frequently invoked in Western motivational speaking as being composed of two Chinese characters signifying “danger” and “opportunity” respectively. We too, like the Chinese, should seize the opportunity and not waste the COVID-19 crisis.