What are your thoughts about the global economy after the Covid-19 pandemic? Once you reconcile yourself with this fact, many things become more apparent, including how to withstand the present onslaught, the way to defend ourselves against the darkened days that still await, and the way to reopen the market responsibly. With the correct understanding, we can reconstruct appropriately, with greater resilience and equity.
At the start of 2020, we thought random mass death did not exist on the planet Earth. For human history, infectious disease was a persistent threat, and the battle against it was an essential element of human civilization. However, from the mid-19th century, science started to get the upper hand against diseases such as cholera.
At the beginning of the 1900s, Europeans learned to limit the harm from malaria and yellow fever, at least for themselves. Streptomycin and penicillin were deployed in force during the 1940s. Childhood vaccinations for rubella, measles, smallpox, mumps, and chickenpox soon followed.
Over two centuries to its eradication from the creation of vaccination against smallpox, science rose to dominate the environment. To be sure, new diseases emerged — starting in the 1980s, as an instance, when HIV/AIDS devastated some communities and countries.
But the prevailing opinion was that such health crises — while needing resources and demanding attention — weren’t central to the organization of our economies, our societies, and our lives.
Random Death Is Back
The global effect of COVID-19 makes that view out-of-date. Random mass death is back, and this fact will now dominate everything, for two reasons.
First, and more generally, this isn’t the first coronavirus. It’s one of many deadly variants to develop since the turn of the millennium, such as severe acute respiratory syndrome (SARS) and the Middle East respiratory syndrome (MERS). There’s obviously no reason to think it will be the last.
Second, this particular coronavirus derives its deadly power from its specific profile. It is highly contagious and can be transmitted by asymptomatic folks. While many folks who contract COVID-19 will suffer only a mild form. It appears most likely to kill elderly people and people with underlying health conditions, such as hypertension, diabetes, and obesity.
But why would any future coronavirus certainly have a similar profile? Coronaviruses — from the ones that cause the common cold to the deadly ones that cause MERS and SARS — do not.
It is totally plausible, given the weak state of our scientific knowledge, a future coronavirus could profile in another way. For instance, proving more deadly to young people compared to old. Or perhaps our kids will be targeted by it.
Once you have had that idea, it’s not possible to think that we may go back to the pre-virus world. Whatever we do, all of our investments and how we prepare ourselves will be determined by consideration of whether we’re shielded from COVID-19 and its successors or made more vulnerable to them.
With this understanding, many points become apparent, or even — in a tragic and challenging time, potentially reassuring.
The U.S. and Europe have obviously hugely underinvested in preparation — including the appropriate science and how to apply it, and COVID-19 will probably prove destructive in the West.
But the reason is not a lack of accessible technology. Finally, China finally managed to carry its outbreak, following a two-month lockdown, while Singapore and Taiwan never fell behind, and South Korea pulled off a remarkable escape at what appeared to be a dangerous moment.
It isn’t our lack of technology that has left the West vulnerable it’s the interaction of COVID-19 along with the health-care provision and our societal structure. In the U.S., mainly, the virus exploits an unbalanced society and a fragmented health system.
We have more than sufficient weapons to fight back. However, many are pointed in the wrong direction — designed with precision for preceding and much smaller disasters, like hurricanes. Influential organizations, with profound capacities, are held back by leaders who fail to gather the essential intelligence, to organize adequately, or even to utilize data in a coherent way to make decisions.
We Will Prevail
This phase won’t last long. We will learn to fight back and with full force. We’ll get ahead of COVID-19. We can begin to rebuild a set of health-care systems, information, and decision-making.
As part of that, we have to create an unprecedented commitment to develop and deploy each organizational and scientific thought that increases the survival chances for our children and our neighbors’ kids.
Eventually, we’ll prevail in the post-virus world. But it’ll be a long haul. The best way to shorten it’s to recognize a return to”normal” isn’t feasible.
Throughout the World Bank Group, efforts are underway to help governments respond to the crisis triggered by COVID-19. The priority now is to encourage overwhelmed health systems and the countless employees and business owners that are being struck. Thinking ahead, though, the response also provides a substantial opportunity to build a resilient and sustainable future.
Learning from the Front Lines of Disaster Response
The first focus has to be on the front lines, including encouraging physicians and nurses, in addition to ensuring that hospitals and homes have water and power, waste is disposed of correctly, and food is available and reasonably priced. Attention must also concentrate on the families hit by radically reduced incomes, particularly those with weak occupations (e.g., restaurants or tourism ) or unstable incomes (e.g., self-employed workers), in addition to the poorest households with small savings.
Right now, the goal can’t be to stimulate demand and increase economic activity before the virus is under control. Instead, we need redistributive efforts to ease the shock.
To do so, authorities can and do rely on existing social security systems. “Adaptive safety nets” that utilize existing social security schemes and can quickly enlarge by increasing the number of beneficiaries and the amounts transferred to them are an efficient approach to help people after a big tragedy. This strategy was successful in Fiji after Hurricane Winston and in Ethiopia and Kenya through droughts and could be applied now.
Many additional ad hoc steps might also have to maintain access to food, shelter, or other essential needs, which range from delaying mortgage or rent payments to the delivery of school lunches. To prevent widespread bankruptcies, it will also be crucial to guarantee liquidity for viable companies. Subsidized loans or public guarantees are typical instruments after natural disasters and may be mobilized.
The kinds of support will depend on country contexts and the development of their financial sectors and social protection systems. In most low- and middle-income nations, support from multilateral development banks and the IMF is going to be critical.
In many low-income countries, it’s urgent to fund a surge in health system capacity and social security instruments. This offers the first chance to create long-term advantages beyond the present crisis. If sustainably designed, these enhancements in health care and social safety can build resilience to future shocks, such as natural disasters and the consequences of climate change.
Helping Countries Recover Sustainably
As the critical health crisis subsides, many families will have depleted savings or big debt and will have to save more and spend less. Similarly, companies and financial institutions will have to rebuild their balance sheet and be able to invest. It’s reasonable to anticipate aggregate demand to stay depressed for an extended period after the pandemic is over.
This will be the time for a stimulation directed at achieving economic and financial recovery. Government actions will be crucial to ensure a return. Based on the situation, these might consist of reforms and tax cuts, money transfers and subsidies, and higher spending in sectors or projects. While the strategies may spark intense debate, there is a compelling case for a significant public spending element at a stimulus package.
These actions will have long-term impacts on the economic system. If investments have the very same advantages over the short term, some choices will do better at boosting sustainable growth and poverty reduction. Thinking ahead, as a result, the primary focus on short-term demands shouldn’t overlook opportunities to attain new curricular goals (and avoid making longer-term goals even harder).
Priority among these: the decarbonization of the world market and the long-term advantages it brings. Our decisions on stimulus packages will affect our capacity to accomplish this objective, generating risks but also opportunities.
The tax reform element of stimulus packages, for example, could create tax rates for different incentives, carbon, or fuel, and energy to decrease carbon emissions. The recent fall in global oil prices offers a chance to revisit the subsidies currently in place in several countries and redirect these resources to more efficient methods to decrease poverty or increase growth while advancing a transition away from fossil fuels.
A wide range of investments may boost shorter-term job creation and incomes and create development benefits and long-term sustainability. Examples include energy efficiency for existing buildings; production of renewable energy; restoration or preservation of natural areas that give ecosystem services and resilience to drought, floods, and hurricanes; investments in water treatment and sanitation; the remediation of polluted lands; or sustainable transportation infrastructure, which range from bicycle lanes to subway systems.
Although the Stimulus might only be required months in the future, now’s the time to recognize the best possible stimulation package, creating”shovel-ready” projects and the policies which enable them.
A Green Stimulus Framework
To manage the crisis, we don’t have to start from scratch: we could use projects already identified in countries’ national or sectoral master plans, in addition to climate change adaptation strategies and the Nationally Determined Contributions (NDCs) of the Paris Agreement. Projects should then be evaluated in terms of their capability to fit the requirements of a stimulus, by considering different temporal and sectoral dimensions such as:
- The advantages of short-term stimulation and job creation, including the number of jobs created as well as the fit with local abilities, whether these projects need domestic or imported supplies, as well as the jobs’ timeliness: how long will it take to do these jobs?
- Medium-term growth advantages, including the effects of maintenance expenses, the number of permanent jobs created after construction ends, or the number of personal investment mobilized.
- Long-term sustainability and contributions to decarbonization, such as assessing the nation’s present and future emission trajectory, the safety of local ecosystems and biodiversity, and the effect on long-term growth possible (as an example, by improving the people’s education or health, or reducing local air pollution levels or flooding damage vulnerabilities).
Many Jobs can score high on all three dimensions. nature conservation, energy efficiency, clean energy alternatives, and the sustainability of transportation are apparent win-win areas for stimulation investments. The Republic of Korea’s 2008 stimulus package comprises significant investments in these sectors, with a focus on building energy efficiency, river restoration, and transportation. The nation was efficient in spending, with almost 20 percent of funds distributed by the first half of 2009.
Restoring degraded forestlands and fields could create many jobs over the short term while also producing net profits worth hundreds of billions of dollars from better crop yields, watershed protection, and forest products. In Ethiopia, for example, the Humbo Assisted Natural Regeneration Project increased local incomes. It helped reestablish 2,700 hectares of biodiverse native woods, fostering carbon sequestration advantages. More tree cover also decreased local drought vulnerability.
Another clear option to do many jobs and boost economic recovery is to invest hugely in retrofitting buildings to make them more energy-efficient, more comfortable, and healthier, as well as better adapted to higher temperatures in the long run.
In a stimulus package, public works programs can help poor citizens handle the direct effect of their COVID-19 catastrophe on their livelihoods. These can be big: In India, there are 80 million members in the Mahatma Gandhi National Rural Employment Guarantee and in Indonesia, 10 million in the Program Nasional Pemberdayaan Mandiri. Such applications focus on afforestation, irrigation, soil conservation, and development; and they could ease economic transformation if carefully chosen. The Productive Safety Net Program In Ethiopia is working to increase resilience and adaptation by investing in the creation of community resources to reverse the severe degradation of watersheds and provide a more reliable water source.
Ambitious infrastructure projects in transport, energy, water, or urban development are generally challenging to include in a stimulus as they take a long time to prepare. But the nature of the crisis may give time to build a green infrastructure pipeline for when the stimulation is necessary to build. These could consist of the growth of electric vehicle charging infrastructure, water and sanitation service coverage, electricity transmission and distribution systems, bus and bike lanes, or making neighborhoods less energy-intensive and more livable.
For those of us who concentrate on the threat that climate change brings to hard-won development profits around the world, this crisis has a sense of foreboding to it. However, if we are strategic in how we design policy responses, we strategically can attain both short and long-term outcomes that benefit both international and national interests. Planning for this must start immediately. The solution to COVID-19 may not only reduce pain and suffering now. However, it can also form the foundation for a safer, greener, and more prosperous future.