Economics of a Pandemic

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Shikaras sans tourists parked on the Dal Lake – KO photo

Iqra Shafi

Global health emergencies and pandemics, although, considerably abated through developments in science and technology and rarely encountered, continue to remain one of the most significant menaces threatening the human race. Humans continue to struggle and fight against both age-old pathogenic diseases like plague that have distressed masses for millennia and new pathogens like the recently discovered Novel Coronavirus that has brought the world to its knees.

COVID-19 being highly virulent and intensely pervasive has wreaked havoc across the globe.

The health risks associated with the pandemic, including the heightened fear and panic accompanying this outbreak is clearly suggestive of the resultant risks and impacts on the economic front. First and foremost, there are costs associated with the health care system inclusive of costs of treatment of those affected with the disease and outbreak control. A stour outbreak like COVID-19 has the potential of overwhelming the health care system, shrinking its capacity of dealing with routine and general health issues, thereby aggravating the problem enormously.

In addition to these shocks and disruptions to the health care sector, this pandemic forces people, both directly affected (patients) and indirectly affected (caretakers) to sit back home, miss out work completely or leads to  performance issues such as decreased effectiveness at  jobs due to stress and pressures back home, driving productivity figures down. In case of worsening scenarios, where specific advisories restricting movement or orders of complete lockdowns have been put in place by governments to contain the pandemic, exercising social distancing becomes mandatory. This leads to closure of educational institutions, shutting down of commercial enterprises, transportation services,  public offices –all of which perturbs the order and brings economic activity to a halt, thereby, pushing productivity abysmally to a nil.

On an international level, concerns over the deadly COVID-19 would mean a steep, dramatic fall in trade and commerce even to the extent of posing an existential threat to several industries like tourism industry (specifically the aviation sector). The long-running nature of the COVID-19 pandemic has the probability of deterring foreign direct investments as well. The economic risks of this pandemic are significant, inclusive of not only the total lost incomes but also the intrinsic costs associated with elated mortality.

It has been witnessed (from previous experiences) that even when the health effects of a pandemic are relatively confined, its economic impacts magnify rapidly.

However, the consequences of such a pandemic are not distributed evenly throughout the entire economy. There are some specific sectors that may even be at an advantage financially, while other sectors and industries may be at a disproportional disadvantage .For instance, pharmaceutical and medical corporations that deal with various antibiotics, personal protective equipment, sanitisers or companies/countries that produce vaccines can be potential economic beneficiaries. On the other hand, livestock producers, health care organisations and life insurance corporations are most likely to bear the financial brunt of this pandemic, in the short run, anyway.

The upside, amidst it all is that we can proactively work towards managing the risk of this novel pandemic and take on initiatives to mitigate its impact. What is required is a concerted and collaborative strategy at the regional, national and international level which can possibly go a long way in protecting our physical and economic wellbeing in the times to come.

Vulnerable sections of the population, specially the poor, are likely to undergo hardships disproportionately because of limited or no access to health care and no or minimum shield in the form of savings to protect against catastrophes on the financial front.

Iqra Shafi is a JRF in Management and is pursuing her Doctorate in Women Technopreneurship at the Department of Management Studies, University of Kashmir. She can be reached at: Iqrashafi406@gmail.com

As long as humans exist, such outbreaks and pandemics will certainly occur and impose a significant burden on the health care systems, yet there are ways to limit the risk of a severe catastrophe on the economic front. As is and has been done in the case of natural disasters, insurance can be a vital facilitative mechanism via which the financial burden across various economic sectors and regions can be distributed. Also, in an attempt to protect and safeguard critical economic resources, prioritising health care workers, military members and employees working for public safety on different forefronts is a must.

We cannot exactly predict how dire the consequences of this pandemic are going to be but we are certain that it will impose substantial costs on the social, physical, emotional and economic fronts.

The upside, amidst it all is that we can proactively work towards managing the risk of this novel pandemic and take on initiatives to mitigate its impact. What is required is a concerted and collaborative strategy at the regional, national and international level which can possibly go a long way in protecting our physical and economic wellbeing in the times to come.

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