COVID-19: Effects and Policy Responses Kunal Sen, Director, UNU-WIDER
The COVID-19 Pandemic
Outline of my presentation • What do we know so far about its effects? • What does it imply about the 2030 Agenda? • How should policy respond? • How to build back better?
What Do We Know About The Social and Economic Effects of the Pandemic?
Macro “Guesstimates” Employment (from ILO June GDP (from IMF, WEO, June 2020) 2020 Monitor) 10 Projections, per cent change 8 6 4 2 0 -2 -4 -6 -8 -10 -12 2020 2021
Very sketchy evidence on actual magnitudes of the economic impact • Most labour surveys have been halted • National income estimates not yet out. • Primary surveys almost completely relying on phone surveys, which have their limitations. • Online surveys: UNESCAP-SSWA online survey • Absence of baseline data • Lack of sampling frames in many cases, so not representative.
One innovative approach – Google Mobility data (per cent change from baseline) Indonesia India 30 20 20 10 0 0 15/02/2020 15/03/2020 15/04/2020 15/05/2020 15/06/2020 15/07/2020 1 6 11 16 21 26 31 36 41 46 51 56 61 66 71 76 81 86 91 96 101 106 111 116 121 126 131 136 141 146 151 156 161 166 -10 -20 -20 -40 -30 -40 -60 -50 -80 -60 -70 -100 -80 retail_and_recreation retail_and_recreation grocery_and_pharmacy grocery_and_pharmacy workplaces workplaces
UNU-WIDER launched a global online survey (in partnership with other organisations) in March in several languages
Crisis aspect that has had largest personal impact 9
Trust in national government: Asia vs other world regions 10
Willingness to give up income to stop pandemic by age (mean) 11
Support of countermeasures put in place by age (mean) 12
COVID-19 and the SDGs
Which SDGs will be affected?
Increases in Poverty (HCR), percentage points, based on different scenarios of falls in per capita income/ consumption for $1.90 poverty line (source: Sumner et al., WIDER WP 2020/77) North, Central and South South Asia West Asia 14.00 12.00 10.00 10.00 8.00 6.00 8.00 4.00 6.00 2.00 4.00 0.00 Kyrgyz… Russian… 2.00 Armenia Azerbaijan Georgia Kazakhstan Tajikistan Turkmenistan Turkey Uzbekistan 0.00 5 per cent 10 per cent 20 per cent 5 per cent 10 per cent 20 per cent
Increases in Poverty (HCR), percentage points, based on different scenarios of falls in per capita income/ consumption for $1.90 poverty line East Asia The Pacific 20.00 14.00 18.00 12.00 16.00 10.00 14.00 8.00 12.00 6.00 10.00 4.00 8.00 2.00 6.00 4.00 0.00 2.00 0.00 China Indonesia Lao PDR Myanmar Mongolia Malaysia Philippines Thailand Timor-Leste Viet nam 5 percent 10 percent 20 percent 5 percent 10 percent 20 percent
Policy Responses: The H-ESS framework
Stringency of COVID-19 government responses, ranking by world region 80 60 Average stringency index 40 20 0 North America East Asia and Pacific Sub-Saharan Africa Latin America and Europe and Central Middle East and South Asia Caribbean Asia North Africa 31-Mar-20 22-Jun-20
COVID-19 government economic support measures, ranking by world region 31-Mar-20 22-Jun-20 80 Average economic support index 60 40 20 0 Sub-Saharan Middle East and Latin America and East Asia and South Asia Europe and Central North America Africa North Africa Caribbean Pacific Asia
The Health-Economic and Social Support (H-ESS) Framework (Addison, Sen and Tarp, WIDER WP 2020/74) Public Health Measures (H) Measures Observations (modalities, requirements, constraints) Personal protective measures (hand- Communication of advice from public health authorities via all available media. washing, respiratory etiquette). Physical distancing and travel-related Physical distancing measures apply to individuals or to specific communities with outbreaks, specific measures segments of the population, or to the population as whole. Identify, isolate, test, treat cases, to break Laboratory capacity created to deliver fast and reliable test results at scale. the chains of transmission Existing professional contact-tracers and trained volunteers. Additional large-scale public health and Movement restrictions, closures of schools, business etc., geographical area quarantine, and social measures (PHSM) international travel restrictions. Maintain preventative health care Especially vaccinations for polio, measles etc. measures Deployment of effective therapeutics and A safe and reliable therapeutics and vaccines if they become available and can be produced at scale vaccination against SARS-CoV-2 Transition phase out of pandemic A transition plan and one that conforms to national and local realities, including the prospects for the economy and thereby the public finances.
Economic and Social Support (ESS) Measures Observations (modalities, requirements, constraints) Enterprise assistance Central banks encourage formal financial system to expand lending to (formal-sector) enterprises. Micro-credit programmes for small and medium enterprises. Taxation (for formal sector enterprises only): deferral of payments (VAT, corporation taxes, property taxes etc.) and extension of deadlines for filing. Informal enterprises: typically assisted via household income support Employer wage subsidies and other Wage subsidies to (formal) enterprises to reduce the need to furlough or fire workers (and labour market measures therefore the need for severance payments. Payments to registered self-employed. Informal workers: mainly supported via social assistance to eligible individuals and households (see below). Provision of training programmes to informal workers. Social insurance General public pension increase for all eligible senior citizens or top-ups confined to low-income pensioners. Social assistance: cash transfers Unconditional and conditional cash transfers; increase in size of payments; coverage extended, admin reforms to increase efficiency and maximize benefit to recipients. Social assistance: workfare and other Unconditional or linked to existing workfare programmes, payment in food or cash. assistance Bundle ad hoc emergency programmes into more consolidated (and lower admin cost) social Transition Phase out of Pandemic protection.
The Pandemic Economy Economic and Output Health Social Support Time
Building Back Better
Building Back Better • For the immediate future: “do whatever it takes” economic policy: monetary and fiscal stimuli, cash transfers, wage subsidies, loans/grants to SMEs, etc. • For the longer term: three principles: build more resilience (green economy, stronger public health systems), promote regional and international coordination (regional transport corridors, debt relief) and recognise intersectionality in SDGs. • The pandemic has taught us that the SDGs should not seen in silos, so should not health, economic and social policy (the H-ESS framework).
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