While the coronavirus pandemic remains very much the subject of ongoing scientific research in terms of its biology and epidemiology, economists around the world are unanimous about the economic damage it has wrought already. The extent of such harm to global economy is being studied as the virus has continued to spread. Being the greatest health crisis of the present century, the impact of COVID-19 on our lives has been overwhelming and more so in the economic aspect. This pandemic has brought the largest shock to humanity impacting the gross domestic product (GDP), employment, investment, among others. Some economists contend that in terms of its severity, COVID-19 has surpassed the 2008 economic crisis.
Profound effects Indeed, the economic effects caused by this disease have been disproportionate, though profound. The poorer countries are the worst-hit as they cannot afford to fight the pandemic effectively due to weakened health system. Moreover, they are unable to offer any effective stimulus package for reviving the economies. Nepal’s situation is precarious amidst the pandemic. The country has numerous challenges to handle simultaneously. The nation’s economy is shattered with government revenues going down due to a fall in production and consumption. Reports suggest that the government has started raising internal loans while we are many months away from the end of the current fiscal year. With rising infection exponentially in dense cities, the health authorities are appealing to people to avoid visiting the over-extended hospitals except for medical emergencies. People’s incomes have dwindled as businesses have got disrupted. For the daily wage earners, life has become unbearable. The predictions of our annual budget presented last May have proved wrong because of circumstances beyond our control. Then the expectation was that Nepal would achieve the annual economic growth rate of 7 per cent. We predicted that our economy would achieve V-shaped economic recovery. Our achievements in terms of controlling the virus and reviving the economy by relaxing containment measures have not met expectations. Globally speaking, the impact of pandemic has been catastrophic. The world economy has received the biggest shock since the World War II. With the world trade shuddered and imposition of border controls, the consumer spending has sunk low leading to a labour-market explosion in which almost 500 million full-time jobs have disappeared. The world’s economic order is going to be recast as exemplified by the huge gaps seen in the performance of countries while they start recovering from the crisis. The Organisation for Economic Cooperation and Development (OECD) forecasts that in 2021 the US economy will be equivalent to its growth in 2019. Comparatively, China will be 10 per cent larger in the same period. Europe will lag behind its pre-pandemic level of output. What caused the above variation is the level of performance of the countries in battling the virus. How quickly the pandemic is controlled determines the economic output of the countries in the post-pandemic period. China has almost brought the pandemic under control, thanks only to its timely interventions to prevent the transmission in the early stage of the disease. However, Qingdao province witnessed resurgence of the virus disease recently. Some countries in Europe are facing the second wave of the virus. Consequently, France and Spain, and the UK are re-imposing control measures. Notably, the pre-existing structure of the economies plays a role here. Some service sector businesses are finding it difficult to run in compliance with health protocols like social distancing because employees are required to work on a face-to-face contact. Operating factories does not have the parallel constraints. The pandemic may have a more visible impact on the economies in the future as risks of supply chain disruption rattle them. This will induce the manufacturers to bring production closer to home. With compulsion of avoiding the physical contact among workers, many countries might prioritise automation. As office workers work from home and continue to work in kitchens and bedrooms at least part of the week, the lower-paid workers like waiters and cleaners will lose their job. More economic activities are increasingly moving online. This trend will enhance the prospects of those businesses and firms that rely predominantly on intellectual property and data. The technology giants like Google, Facebook, Amazon, among others, have been the largest beneficiaries because of the booming online business. There has been a surge of digitisation in the banking industry and Nepal is no exception in this case. Against this backdrop, a debate has raised whether the pandemic will accelerate the process of making the world less globalised, more digitised and unequal. Some leading thinkers have contended that the coronavirus pandemic has already had a profound impact on how we live, work and move about. They argue that any estimate of the timing of economic revival is complicated by the dependence of the economies on our uncertain human effectiveness in controlling the virus. More than anything else, the pandemic has exposed the inadequacy of healthcare systems and the inequality of its effects. In Nepal, we have faced a shortage of critical healthcare facilities, including ventilators, and optimistically, the crisis will push for appropriate reforms in the concerned sector.
Vulnerabilities The government has announced a series of measures, including the establishment of the Centre for Disease Control and Food and Drug Administration plus strengthening the health infrastructure in different parts of the country, learning lessons from the current pandemic. No doubt, the pandemic has shattered lives, disrupted markets and exposed the competence of governments. Thus, the pandemic may have far-reaching consequences. In the words of Stephen M. Walt, a Harvard professor of International Relations, there will be further retreat from hyper globalisation, as citizens look to national governments to protect them and as states and firms seek to reduce future vulnerabilities.