Developing economies & response to pandemic
Emerging and developing economies have several contending issues at hand, sharp drop in trade and tourism, dampened capital flows, much tighter credit conditions, ebbing remittances and of course a debt pile that blunts the fiscal expansion prospects. A few of them have to still solve banking woes, stemming from NPAs and some of the sectors to which the banking system owes its loans to have slowed due to lack of demand.
East Asia is now slated to grow at a scant 0.5 per cent, South Asia will contract by 2.7 per cent, Sub-Saharan Africa by 2.8 per cent, Middle East and North Africa by 4.2 per cent, Central Asia by 4.7 per cent and Latin America by 7.2 per cent.
These were the last numbers from the World Bank (June 2020). Are there some success stories within these grim tales, some stand out like Vietnam or Indonesia while India has been able to keep the mortality rates very low, which is also commendable. Vietnam has dealt with the pandemic with exemplary dexterity by eliminating the spreading roots, while Indonesia has taken a twin program of fighting the pandemic together with focus on job creation.
Vietnam's first case was reported in early January'20 but in no time the country was ready with a comprehensive plan to respond to the health crisis, first with a proactive plan on "target testing" with three degrees of "contact tracing" for each positive case with large Government centers providing quarantining arrangements and in no time the borders were closed for all foreigners. With the full experience of SARS, Vietnam had the infrastructure and the processes fully tried and tested but its vibrant primary health infrastructure had enormous room to expand in times of crisis; health care expenditure increased by 9 per cent year on year per capita after SARS, EBOLA and ZIKA, making most of the health statistics far better than most developed nations.
The biggest success story can be summarized by Vietnam's ability to provide Test results within 80 minutes, which many of the developed nations took five to six days, which made the testing useless. This is also the reason that Vietnam could test 1,000 people for each tested positive case, which is the highest in the world; Vietnam today has about 1,000 detected cases and have reported only two deaths so far.
Economic response to any pandemic must start with the focusing on the heath sector and past pandemics were taken as a learning opportunity, those who have done better this time have actually sharpened this focus with an unprecedented preparedness.
The others on this list are Indonesia, who have now merged their disaster recovery task force with the National Economic Recovery taskforce under the Economic Affairs Minister and the full focus on State Owned Enterprises to take the economy out of the unemployment crisis is a distinguishing feature of the recovery. Also Indonesia has factored in a long and arduous battle with the virus and have taken long term view of things to come. Their response to the recent job losses is directed to long term strategy to capitalise on the recent apathy of many global firms to stay anchored to supply chains deeply embedded in China. The other centralised focus has been to direct credit assistance to micro, small and medium enterprises. This diversity of credit assistance that touches vast sections of people and business is a distinguishing feature for Indonesia.
Finding a balance between two potentially competing forces, health and economic interests is one of the key drivers of success.
ABOUT THE AUTHOR:
Procyon Mukherjee works as Chief Procurement Officer at LafargeHolcim India. The ideas presented are his personal and have no connection to the beliefs of the company where he works.