COVID-19 brought the world to a halt... but after months of uncertainty, it seems the situation is slowly taking a turn for the better.
On the road to recovery, an important consideration is towards restoring livelihoods and improving living standards as, ultimately, a strong economy will serve in the best way to protect jobs and ensure governments can continue funding vital public services, including the healthcare response.
This month marks the end of COVID-19 home-stays and the beginning of an era where businesses are slowly - and responsibly - reopen.
Decisions to ease restrictions on most businesses have been taken as the outbreak seems to be more contained than it was in March, April and May. A study by Dubai Chamber surveying over 1,000 CEOs found 70 per cent of small businesses in the emirate expect to close their doors within six months from April.
On the other hand, surviving companies are still expected to take severe measures to contain the financial fallout, including slashing salaries and laying off employees.
A many layered approach
This could eventually affect the country’s demographics, as expats make up more than 88 per cent of the country’s population. We will thus have to account for:
* Short-term economic impact, including the number of people who can return to work when it is safe to do so. And work with businesses to help people go back to workplaces safely;
* Long-term economic future, which could be harmed by people being out of jobs and through insolvencies. Invest in supporting an economic bounce back.
* Financial stability, so that the banks and others can continue to provide finance to the economy;
Let us see at the two measures of the “mobility rate” and the COVID-19 recovery rate and their correlation with the reopening of the economies:
Mobility Index: This refers to the change in activity around workplaces, by discounting activity around residences, and measured as a percentage deviation from the baseline.
Data for the first variable comes from Google’s COVID-19 Community Mobility Reports, while recovery rates rely on values from the website CoronaTracker, which uses aggregated information from multiple global and governmental databases such as WHO and CDC.
The higher the mobility rate the more economic activity it signifies. In most cases, mobility rate also correlates with a higher rate of recovered people in the population.
High mobility, high recovery: This results in lifting restrictions for countries in this quadrant, and people make a return to work. New Zealand is an example.
High mobility, low recovery: Despite low COVID-19 related recoveries, mobility rates of countries in this quadrant remain higher than average. Some countries have loosened lockdown measures, while others did not have strict measures in place to begin with. Brazil is an example.
Low mobility, high recovery: Countries in this quadrant are playing it safe, and holding off on reopening their economies until the population has fully recovered. Italy is an example.
Low mobility, low recovery: People in these countries are remaining indoors as their governments continue to work on crisis response.
A word of caution here, that it’s important to note that a “second wave” of new cases could upset plans to reopen economies. However, as countries reckon with these competing risks of health and economic activity, there is no clear answer on the right path to take.
COVID-19 is a catalyst for an entirely different future, but interestingly, it’s one that has been in the works for a while. Yet, those hoping for a V-shaped recession and recovery may well be disappointed.
It is reasonable to expect the pandemic will have lasting implications for the economy and for society. While a consensus on the nature and speed of the healing process has frayed, the general sense is still that the challenge of recession will give way to opportunity on the rebound.
The pandemic has to give rise to a new era of human development. Otherwise, economic and social development may falter for decades.
- Michael Davis interim CEO at NMC Health.