Some experts have already begun assessing how recovery might look once the virus is contained, and which countries stand to bounce back best.
by Tala Ramadan -Source: Annahar
A couple wearing protective masks to protect against coronavirus walk past a mural reading ‘Stay home’, in the Shoreditch area, as the lockdown continues due to the coronavirus outbreak, in London, Saturday, April 25, 2020. (AP Photo)
BEIRUT: The COVID19 pandemic disturbed the political, social, economic, and financial structures of the whole world and injected an unprecedented amount of uncertainty into the global economy leading the International Monetary Fund to predict that the pandemic would incite the worst economic slump since the Great Depression.
While managing the immediate health crisis is necessary for economic stability, some experts have already begun assessing how recovery might look once the virus is contained, and which countries stand to bounce back best.
The British Broadcast Company (BBC) turned to the 2019 Global Resilience Index by insurance company FM Global, which ranks the resiliency of the business environment across 130 countries, based on factors like political stability, corporate governance, risk environment, and supply chain logistics and transparency, and paired these rankings with their country’s initial response to the virus.
As a result, nations across the globe that have a high likelihood of maintaining stability and resilience through the crisis were identified.
Ranked second in the index, Denmark scores high marks for its supply chain tracking and low governmental corruption. The country also moved quickly when it came to enacting social- distancing measures in light of the spread of the virus. It announced a shutdown of schools and non-essential private businesses on 11 March and closed its borders to foreigners on 14 March, when the country only had a handful of positive cases. But the moves have already proven effective. The Danish culture, which tends to be trusting of authority and willing to stand together for a common cause, has also had an impact on the effectiveness of the measures.
Singapore scores high in the index for its strong economy, low political risk, strong infrastructure, and low corruption in the survey, pushing it to number 21 in the overall resilience ranking. The country also moved fast to contain the virus and has had one of the flattest curves in the pandemic.
To capture the United States’ broad geographic footprint, the index splits up the country into West, Central, and East regions, but as a whole, the US ranks well (9th, 11th, and 22nd, respectively) for its low-risk business environment and strong supply chain. Containing the virus has proven challenging in major metropolitan areas like New York, and unemployment has already jumped to historic levels, in large part due to the mandatory shutdowns of more than half of US states, which has particularly hit the restaurant and retail workers and other businesses that rely on foot traffic. But the US government has moved quickly to pass stimulus measures to stabilize the economy, and social distancing strategies enacted elsewhere in the country, which seem to be having an effect, should lessen the overall impact of the virus, allowing for a quicker economic recovery.
Financial institutions like Goldman Sachs and Morgan Stanley are predicting a “V-shaped” recession and recovery, with unprecedented negative immediate impacts (as is already being seen) but a relatively quick recovery in the later quarters of the year; while consultants like McKinsey are taking a more measured, but still optimistic view, on recovery based on the successful implementation of public health measures, like the lockdowns in place, and policy interventions like the already-announced $2t stimulus package, likely the first of many. The US is also critical to the world economy, representing nearly a quarter of global GDP, and the recovery of the global economy is highly dependent on how the US fares.
Due to recent improvements in corporate governance, Rwanda has made some of the largest leaps in the index in recent years, jumping 35 spots to its current rank of 77th most resilient in the world (and fourth highest in Africa). Most importantly, it looks particularly well-positioned to bounce back from this type of crisis as the country successfully contained Ebola from its borders after an outbreak from the neighboring Democratic Republic of the Congo in 2019.
With its mix of universal health care, medical supply-delivering drones, and thermometer checks at its borders, Rwanda stands to be well-equipped to maintain stability throughout the crisis, especially when compared to other countries in the region.
Ranked 12th-most resilient in the index, New Zealand scores especially high in corporate governance and its supply chain. The country has also been able to move quickly to contain the spread of the virus by shutting borders to international travelers on 19 March and enacting a no- essential-business lockdown on 25 March.
With tourism and exports a major part of the economy, New Zealand will face some struggles to its economy in the near term, but this doesn’t necessarily have to be a bad thing. Overall, the country is well-placed for a stable recovery, with low levels of government debt and the ability to enact quantitative easing to keep interest rates low.