- While phased reopening has raised hopes to reboot the economic system, striking debate on human health versus economic growth deserves closer attention.
- While macro fundamentals are indicating mixed signs, second wave of virus infection is raising further fears.
- As on 26 June 2020, World Health Organization (WHO) reports 9.29 million confirmed cases of COVID-19 in 216 countries and more than 479k confirmed deaths.
“The world is learning the hard way that health is not a luxury item; it’s the cornerstone of security, stability and prosperity.”- Dr Tedros Adhanom Ghebreyesus, Director General of WHO.
There is a growing social and economic dilemma around loosing lives to COVID-19 or foregoing the health of the economy. While, AU economy is heading towards gradually recovery, another wave of infection has been a growing concern among policymakers.
President Donald Trump recently stated that the US will not close down again, even when the world’s biggest economy tops the chart of COVID-19 confirmed cases as per a John Hopkins data base.
India, currently at rank 4 as per the database, is facing a surge in cases post phased easing of lockdown.
In May, Germany saw a surge in new coronavirus infections just days after it launched initial tentative steps to reopen the economy.
South Korea is believed to be witnessing second wave of pandemic around Seoul, anticipating re-imposing strict lockdown measures if situation continues to worsen.
While Russia witnessed spike in infections as the country’s official non-working period ended in May.
While opponents of unlocking the economies are pointing at threat to health care system and people’s survival, economists are wary of deep global recession.
On 21 June 2020, 183k new cases of the virus were reported, marking the most recorded in a single day so far. Dr Tedros exclaimed- “It seems that almost every day we reach a new and grim record.”
Mixed Signs of Economic and Health Reboot
While, there has been some encouraging picture emerging on health and economic front.
John Hopkins database reveals that as on 26 June 2020, global recoveries from the virus stood at more than 4.8 million- maximum in the Brazil, the US and Russia.
Countries like New Zealand recently marked the nation COVID-free, though a couple of new cases have raised worries again.
Moreover, medical science has been advancing well with several dedicated vaccine trials and testing globally by some of the prominent players including Moderna, Gilead Sciences, AstraZeneca and Pfizer.
Besides, governments across the world have been on their toes to bring their respective economies back in the saddle and consequently, a new phase in the COVID-19 pandemic lies upon us- a time of hope and parallelly, of better caution.
A Harvard Business Review report, explaining economic cost of continued lockdowns suggests that the loss of value added is between CHF 0.7 and 1.4 billion per day in Switzerland, above €3 billion per day in Spain and a staggering USD 14 billion per day in the US.
Moreover, US jobs data has been worrisome as in April alone; the number of unemployed workers increased to 23.1 million. While, Australia’s unemployment rate for May 2020 rose to 7.1%.
So much so, global outlook is highly uncertain, and the world economy is on a tightrope. The International Monetary Fund (IMF) projects global economy to contract sharply by 4.9 percent in 2020, much worse than during the 2008–09 financial crisis.
Economy Vs Health
Australia, New Zealand, the US, the UK, India, China are few of the many countries who have launched phased reopening of their economies. Essential services, restaurants, malls, necessary travel are few services that have opened up in these economies.
Economists and policymakers rightly believe that keeping the economy shut for too long in hope of suppressing COVID-19 transmission might infect the economy in dire ways.
And 2020 has demonstrated this the hard way, with a World Bank forecast projecting that the Global Virus Crisis (GVC) recession will be the deepest since the second World War!
To recover from severe contraction of economic activity that was a result of lockdowns, social distancing norms and strict quarantines, countries are left with no option but find smart strategies for reopening businesses, while minimising health risks.
Threat of Second COVID-19 Wave
Simply put and as majority of health experts opine, reopening the economy too soon invites the unwelcoming risk triggering a new wave of infections and possible deaths.
With mounting economic costs, applying extra caution on managing health crisis is paramount. Social distancing guidelines and group limits remain a mandate while the world awaits a vaccine.
The WHO urges countries to be careful and creative in finding solutions that enable people to stay safe while getting on with their lives while adhering to fundamental public health measures. However, what remains worrisome is the fact that even when economies and businesses take every conceivable precaution, the virus risk is so peculiar that it would still persist.
As Dr Tedros states- “It’s not a question of whether countries can afford to do this (make universal health coverage a priority), it’s a question of whether they can afford not to.”