100 days & counting
Flattening the epidemiological curve also means an economic cessation. Who will bear the burden in an unequal world?
The pandemic will make 14 million more poor people in the world
BY APRIL, the COVID-19 pandemic metamorphosed into everybody’s crisis. The emergence of Europe and the US as deadlier hotspots than China gave credence to the popular assumption that COVID-19 is an infliction brought on by the rich and well-endowed. By mid-April, it rampaged across the world disrupting the planet like never before. Over 1.73 million people have contracted the novel virus disease and more than 0.1 million have succumbed to it. Unlike the Spanish Flu pandemic of 1919-20 which was spread by World War I soldiers, the current pandemic is being transmitted by ordinary citizens of a globalised world. This distinction makes COVID-19 extremely hazardous, both in terms of health and economic costs.
This is the first time in human history that the entire world has stopped travelling. Currently half of the world’s population—3.1 billion people—is under lockdown, as per the Johns Hopkins University. The pandemic has forced countries that account for two-thirds of the planet’s output and income to embrace containment policies, suggests the Centre for Economic Policy Research, a Londonbased association of over 1,300 economists engaged in research. This is extreme as the modern economy thrives on mobility and everybody is somebody’s economic interest/investment.
The lockdown in India has kept the workers from working and consumers from consuming. This effectively has killed the demand and supply at the same time. The economy has ceased to exist and nobody knows for how long.
Yet, global lockdown is the only prescription. Countries need to flatten the epidemiological curve (the rate of COVID-19 spread) to disrupt transmission. And the faster they try to flatten the curve, the restrictions and resultant economic paralysis become widespread. The world can stop the spread of the virus only by embracing economic stagnation. As Pierre-Olivier Gourinchas, a visiting professor at Princeton University, says, “Flattening the infection curve inevitably steepens the macroeconomic recession curve.” But the question is: who will be the worst affected by the economic side-effect of the COVID-19 treatment?
“This pandemic is not just a health crisis. For vast swathes of the globe, the pandemic will leave deep, deep scars,” says Achim Steiner of the United Nations Development Programme (UNDP). “We risk a massive reversal of gains made over the last two decades, and an entire generation lost, if not in lives then in rights, opportunities and dignity.”
From the day national lockdown was imposed in India, disturbing images of mass exodus of migrant workers from urban centres appeared. From Kerala to Bihar; Delhi to Kashmir; Andhra Pradesh to Odisha, millions of workers headed to their villages. It was not the fear of
THE ECONOMY HAS CEASED TO EXIST AND NOBODY KNOWS FOR HOW LONG
COVID-19, but the unbearable burden of surviving without no money, food or work that triggered the mass exodus. About 87 per cent of India’s workforce is in the informal sector. A Down To Earth calculation shows that some 125 cities/ towns reported outmigration. What is worse is that even after completing the arduous journey to their villages, the migrant poor continue to face an uncertain future. What will they do for survival?
Globally, at least 25 million people will be unemployed, which will translate into $3.4 trillion loss in workers’ income, estimates the International Labour Organization (ILO). The economic loss will precipitate further because an estimated 55 per cent of the world’s population does not have access to social protection.
The economic loss due to mobility restrictions will never be recovered. According to the United Nations Conference on Trade and Development (UNCTAD), the global economy would slow down to below 2 per cent in 2020, leading to over $1 trillion losses. According to the International Food Policy Research Institute
(IFPRI), one percentage of global economic slowdown pushes poverty levels by 2 per cent. This means the pandemic will leave 14 million new poor in the world. Disruptions in labour markets will reduce labour productivity and supply by 1.4 per cent in 2020, as per IFPRI.
The World Bank estimates that 100 million people fall back into extreme poverty each year due to unexpected catastrophic health expenditures. This number is likely to increase due to
COVID-19. Over 40 per cent of the world’s population has no health insurance or access to national health services. They spend close to 10 per cent of the family budget on healthcare every year. In India,
close to 68 per cent of households incur out-of-pocket medical expenditure due to dependence on the private healthcare system. Community transmission will overwhelm the public health infrastructure in almost all states. This will increase the dependence on private healthcare and push many more into poverty. In Maharashtra, which has the most COVID-19 cases in the country, there is one government hospital for every 0.17 million people, on an average.
The current crisis has further precipitated food insecurity. Currently, 820 million people endure chronic hunger. Of them, 113 million are so food-insecure that they will die without external assistance. The current scenario has disrupted the livelihood chain and global support system. This will result in largescale hunger deaths. The scale of the crisis has prompted UNCTAD to seek a $2.5 trillion rescue package to save developing countries from financial distress. It includes writing off debt worth $1 trillion.
Africa alone needs $100 billion of immediate emergency financing to deal with the “pandemic shock” that will result in drastic revenues losses and economic slump. It will also jeopardise the progress of the Sustainable Development Goals, particularly in developing countries. A financing gap of $2-3 trillion will be faced by developing countries for the next two years, as per UNCTAD.
There are indications that many hotspot countries will be peaking in the
COVID-19 spread. But at the same time, many countries are just entering into the exponential spread phase. The other challenge is that pandemics often reoccur, like the Spanish Flu that struck three times between 1919 and 1920 and wiped out nearly 2 per cent of the world’s population. It killed both the poor and the rich, including US President Donald Trump’s grandfather. We now know that
COVID-19 will be no different and that the planet has entered into an extremely unpredictable disorder.