Pandemics are the large-scale outbreaks of infectious disease that can greatly influence the economy, society and political decision making. Studies have suggested that the likelihood of pandemics has increased over the past century because of increased global travel and integration, urbanization, changes in land use, and greater exploitation of the natural environment. This thus has disrupted the overall globalization system and economies have started going down.
This going down of th globalized system and economies across the world, has resulted in decline in national income, trade, transportation, tourism and employment. Thus, leading many economies to the recession.
While looking at the current pandemic (Covid-19) which has influenced the world significantly, economy has taken a nose dive. Across the world Covid-19 has affected 664,891 people. Out of this number there are, 30,893 deaths and 142,449 people have recovered.
Out of these numbers mentioned above Pakistan has also seen an increase in cases. In Pakistan currently there are 1526 cases. Out of these 1526 cases, 13 deaths are so far reported whereas 29 so far recovered.
Policy rate should be down significantly to the level where post-pandemic investors can find incentives and bring back balance into the investment framework
Thus, looking into the figures and numbers federal government at national and provincial governments at provincial levels has been seen taking decisions to rescue people and system. Highest number of challenges have been seen in the form of saving people from the disease, saving people from hunger, rescuing the economy and ensuring proper management of supply chain.
These kind of challenges in one way or other are linked to the economy and we can term this new economic system as Covidonomics (economy in pandemics).
First and foremost, looking into the challenge of saving people which is not only linked to health system but also to the management of health systems. Pakistan’s health system has not been seen as achieving the health goals and ensuring quality health services at national, provincial and sub-national level. Number of patients to bed which is significantly low has been the challenge unnoticed. Similarly, number of doctors is low i.e. patient to doctor ratio is low. Further digging deep into the system, it can also be viewed that in terms of expenditure, non-development expenditure has been seen higher in comparison to the development expenditure (PKR 179.72 billion against PKR 24.03 billion).
Therefore, looking into the current health system and Covid-19 pandemic health system was not found to have significant capacity to deal with the big challenge. Primarily, challenge was found in terms of capacity of doctors to deal with the pandemic type situation with the less infrastructure present. This infrastructure in the form of personal protection equipments (PPE), ventilators in the hospital, number of low health facilities at local level and low number of doctors at the existing health facilities.
Second, looking at the current pandemic situation food security became another significant challenge. This food security challenge has different names i.e. hunger, feeding the needy (daily wagers) and low skill workers, ensuring food and stock to those who don’t have jobs i.e. no financial resources leading to no food. This current food security challenge in the form of hunger has therefore seen the country into the crisis situation.
Third, economy has also became a challenge to be looked into. To manage the economy challenges which are now visible include: 1) investment uncertainty (This investment uncertainty has led to the outflow of dollars from the system, resulting in rupee to bear more pressure). 2) Impacts on balance of payment which can further have influence on macroeconomic indicators such as employment, inflation, behavior of exchange rate and fears of recession in those parts of the world with whom Pakistan trades; 3) impact on migration remittances i.e. aid inflows in the developing countries. This reduction in the aid inflow will have influence on the development or welfare needs of developing countries because of expansion of safety net programs in the developed countries because of priorities; 4) Travel and tourism industry will also see a significant hit which in Pakistan was seen to rise and earn more revenue. Fear is that revenues for travel and tourism industry may wipe out from the system.
Fourth, ensuring proper supply chain mechanism is another challenge which Pakistan in current scenario is facing. This supply chain component can be linked to transportation of food and other edibles to different parts of the country, transportation of crops to the market and other forms of transportation in the form of B2B and B2C. The whole supply chain mechanism in this whole scenario has been distorted thus having negative impacts on overall system.
Government of Pakistan and provincial governments have tried to bail out the system with financial resources but there is need to engage and increase the capacity for whole of the system in one way or another. For this purpose, there is need to focus on development expenditures. This focus on development expenditures should be highlighted significantly in health sector leading to more soft skills and infrastructures to capacitate health units. Now to strengthen the health system post-pandemic, there is need for federation to take those roles of the provinces after 18th amendment where there is lack of capacity on provincial side. Particularly looking towards health need for federal government to look into the areas of research and infrastructure where least developed provinces and districts don’t have capacity to work.
Second, in current food security related challenges integration and expansion of social safety net programs should be ensured with the proper supply framework in place. Disbursement of cash and food related commodities should be made through partners involved in social safety net type of activities. Besides involvement of partners in the integrated and expanded social safety net programs, strong monitoring framework should also be in place to ensure deserving gets the food and cash. Through this approach social safety net programs will have long term impacts on development.
Third, while looking into the economy need of the time in current pandemic situation and to manage post-pandemic phase, first and foremost thing to do is balancing of domestic demand and supply framework. Secondly, localized economic policies should be in place in order to support those sectors which are going through major challenges in this pandemic situation. Third, to bring in certainty to investment part central bank need to manage the policy rate at the level where investor don’t feel the pressure of losing more money in current scenario. Policy rate should be down significantly to the level where post-pandemic investors can find incentives and bring back balance into the investment framework. This balance will also help sectors such as transport and tourism to grow at slow pace.
In current scenario, though priority should be to rescue people first and economy after rescuing people but there is also need to have a response to balance overall system. Current Covid-19 pandemic has exposed health system and policy planning but also have exposed weak linkages in economic and other policy related matters. This exposition has therefore led to the need for localized policies which should be the priority post pandemic scenario.
This article was originally published at: https://dailytimes.com.pk/586001/covidonomics-and-pakistan-economy-in-and-after-covid-19/
The opinions expressed in this article are the author's own and do not necessarily reflect the viewpoint or stance of SDPI.