Unanswered questions

Will abandoning lockdowns at a time when the risk of a surge in cases remains high lead to a greater economic disaster?

On February 26, Pakistan recorded its first two cases of a novel coronavirus, days after Islamabad closed its border with Iran, where 19 people had died from the virus. Pakistan went into a lockdown on April 1. On that day, there were 2,291 confirmed cases of coronavirus and 31 deaths from the disease.

On May 7, there were 23,693 confirmed cases of coronavirus. The first coronavirus-related death was reported on March 23. 46 days after the first Covid-19 death was reported, the tally stood at 545.

The lockdown was going to be eased from May 9. Has the government achieved the primary objective ofthe lockdown, which was said to be to ‘flatten the curve’ and protect the healthcare system from collapsing? Was Pakistan on May 9, a safer place in terms of coronavirus risk than April 1?

By any measure, there was a greater riskin May (when the lock down was to be eased) than in April (when it was ordered).

Is extending the lockdown an option for Pakistan? Not only can Pakistan ill-afford to extend the lockdown because of economic considerations, but it would also be politically suicidal for the government because most of the world is reopening. So,the government is between the proverbial rock and a hard place.

According to one estimate, somewhere between 20 and 70 million people in the country might fall below the poverty line because of Covid-19.

However, it must be pointed out that Pakistan’s economic vulnerability predates coronavirus. According to the recently published World Food Programme report 2020 Global Report on Food Crises, about 23 percent of the people in drought-affected areas of Balochistan and Sindh are stressed, whereas 51 percent of the people in these areas are in crisis or worse circumstances.

Pakistan is among the countries where there is a major food crisis, and more than 40 percent of the under-5 children are stunted. Pakistan shares with Yemen the dubious distinction of having the world’s highest population of stunted under-5 children (46.5 percent).

Though there is a clear tradeoff between economy and health, the extent and intensity of the tradeoff are not yet clear. It is hard to disagree with the advice offered by economists that governments should take measures like accelerating testing and providing financial incentives for the production of a successful vaccine.

But there is also a broad agreement that abandoning severe lockdowns at a time when the likelihood of a resurgence in infections remains high is likely to lead to more economic damage than staying in lockdowns to prevent a resurgence.

So far, there are two extreme positions on the question of the opening of the economy. One view denounces all restrictions on individual liberty as a threat to fundamental human rights. The other looks at the easing of lockdown as a rejection of science and a capitulation to crass capitalism, which puts money over human lives.

There are two extreme positions. One view denounces all restrictions on individual liberty as a threat to fundamental human rights. The other view looks at the easing of lockdown as a rejection of science.

The right approach would be to debate the level of tolerance towards the costs and risks of a lockdown or opening. The right approach is to understand that there are no riskless or costless solutions. Weighing risks against rewards is fundamentally answering political and moral questions, not scientific or economic ones. No matter how we resolve them, there will be costs and risks, winners and losers.

One reason why there is a visible complacency in Pakistan is that the fatality rate from the coronavirus has been lower in Pakistan than in some other countries. Out of every one million people, the number of people who died after the first 46 days of coronavirus was 414 in Spain, 305 in Italy, 256 in France, 248 in the UK, and 116 in the US while there were only two fatalities in Pakistan.

Today, one can afford to be complacent at one’s own peril given the exponential growth in the fatalities from the virus in Pakistan and around the world.

It is not easy to measure the full cost of easing lockdowns because it is unclear how long it will take for the economy to reach the pre-Covid 19 levels. One thing is sure: it will take a long time before the economy begins to operate at its full potential.

Businesses do not exist in a vacuum. They need employees, some of whom will not be able to come back to work because they are old and have chronic health conditions. Many mothers will find it challenging to reach the workplace because schools and child-care facilities are still shuttered.

Businesses also need customers. The existing businesses have not been designed to operate in a world where the risk of getting an infection is high. A recent study showed how a single diner in a restaurant in China who didn’t know she was sick infected nine others.

Covid-19 being a pandemic, Pakistan will no longer be immune to the changes occurring in other countries. The global demand will be severely depressed, which will consequently take a heavy toll on our exports.

What can we possibly do to reduce the risk in the short run? Pakistan is clearly ill-equipped to follow the ideal measures in these circumstances, such as a massive uptake in testing and contact tracing and isolation. So, the focus needs to be on the best practices in social distancing. For example, under carefully sanitised conditions, half of an organisations’ employees may come for a morning shift and half for an afternoon shift, to allow people to maintain distance.

The global mortality trends show that a majority of the people to have died from the virus are older than 65. At the same time, a significant proportion of deaths at younger ages involve underlying health conditions. The objective of minimising deaths can be achieved by forcing a stay-at-home regime on the elderly and the medically vulnerable population, without keeping millions of children out of school and daycare and millions of workers from their livelihoods. Limiting the number of working days may be another option.

Life in the long-term would be the new normal, it would never be the same, especially for this generation.

The new normal will involve a change not only in the economic fortunes but also in the consumer preferences and production patterns. The people who are forced to work from home are indeed forced to adapt their whole lives. The behaviour learnt and adapted during the lockdown will not disappear overnight once the quarantine is over. Consumers are likely to be cautious for the foreseeable future, which may fundamentally change their life patterns and the economic conditions. Just as China’sSARS 2003 outbreak led to the growth of e-commerce, Covid-19 may even more fundamentally change the life patterns.

What would be the ramifications of the changes in global business practices for Pakistan’s business community? How will new business dynamics change the business of small shopkeepers in Pakistan,who currently constitute the majority of the workforce?Very few of them are technology savvy?

Will the choicest places in the business centres and the properties in the business hubs become irrelevant because of the increased internet connectivity? What role will G5 play in changing the business dynamics? Will it reverse the trend of growing urbanisation, and, if so, will people become more attached to the natural surroundings, easing the pressure on the property prices and diffusion of the development of infrastructure across the previously less developed areas?

The writer is an Assistant Professor in the      Department of Economics at COMSATS University Islamabad, Lahore   Campus

Unanswered questions: Will abandoning lockdowns at a time when the risk of a surge in cases remains high lead to a greater economic disaster?