Covid-19 fight needs clarity
The number of Covid-19 cases doesn’t seem to slowing down anywhere except for China where the new coronavirus originated. But while the domestic outbreak seems to have been brought under control, imported cases had soared to 595 as of Friday, raising fears of a second wave and prompting Beijing to bar all foreign travellers.
The continued spread of the pandemic that has hit 198 countries and territories is expected to set off a global economic crisis as consumption plunges, countless business are idled, while border controls and entry restrictions deliver a hammer blow to travel and tourism.
Roberto Azevedo, head of the World Trade Organization, last week warned of job losses “that are worse than the global financial crisis a dozen years ago”.
A pandemic-induced economic slowdown implies lower corporate earnings and greater debt servicing burdens on companies. This would lead to increasing defaults, plunging investor confidence, and potentially a widespread credit crunch.
The slowdown has already been seen in Southeast Asia. Singapore, the only developed economy in the region, said preliminary figures showed its first-quarter GDP dropped by 2.2% from a year earlier. Given the uncertainties the outbreak has brought to the global economy, the city-state is on the verge of its first recession in almost two decades.
In Thailand, where infections surpassed 1,100 on Friday, the central bank warned of the first contraction since the 2008 global financial crisis. GDP could shrink by 5.3% as the virus impact has been heavy on the country’s key tourism and export sectors.
Thailand has banned the entry of foreigners and the government is even considering a 24-hour curfew as its next step under the emergency decree that took effect on Thursday. That followed the Bangkok Metropolitan Administration’s decision to close 26 businesses, including shopping malls and dine-in restaurants, in the capital from March 22.
Malaysia and the Philippines currently bar foreigners from entering, Singapore bars all short-term visitors from entering or transiting through the city-state, and Vietnam requires a health certificate that verifies all visitors have tested negative for the coronavirus.
Elsewhere in Asia, India’s economy has come to a halt under a three-week nationwide lockdown that began last Wednesday. It mandates the closure of all non-essential businesses and government offices. Those allowed to stay open include producers and sellers of food and medical products, as well as telecoms and power companies, banks, law enforcement and media.
What could make it worse for the economies of individual countries and the region is that countries have moved to tighten border controls against each other. Infections reported in Asean account for only 1% of the world total but members of the 10-country bloc that prides itself on integration are viewing their neighbours differently these days.
For example, Vietnam closed its borders with Cambodia from March 15, while Cambodia later said it would stop all travel, including flights, between the two countries. Cambodia relies on Vietnam for agricultural imports and that could push up produce prices, say logistics operators.
Attempts to prevent the outbreak have caused substantial disruptions in business and productivity due to restrictions on the movement of goods and people, as well as increased costs of doing business. For example, the Indian unit of Nestle last Tuesday had to suspend operations at some plants and distribution centres in the country of 1.3 billion and is now in talks with authorities on getting them running again.
Cross-border controls could adversely affect food security, income and employment, according to Cassey Lee, senior fellow at the Singapore-based ISEAS-Yusof Ishak Institute. “Bilateral consultations are important at this stage to mitigate the effect of travel curbs,” he said.
Deeper coordination among countries’ trade, agriculture, labour and immigration ministries will be needed to ensure secure movement of essential goods and services, suggested Mr Lee.
At times of crisis, strong leadership and clear messages to the public are critical. What we have been seeing, however, are a lot of unclear announcements and poorly thought out measures that have sparked confusion and fear. People rush to stores to stock up on non-perishable foods, prices spike and that causes more of a financial burden for people already affected by the ongoing turmoil.
With Covid 19 roiling economies and markets, most of the pubic is eagerly awaiting and ready to comply with clearly explained government measures, in the hope that these could help prevent the situation from worsening. Asean’s resilient economy, if reinforced by good policies, can withstand this latest challenge and emerge even stronger.