Covid-19 and the economic challenges for South Asian countries

One of the industries hardest hit by the Covid-19 pandemic and the lockdown policies has been the travel and hospitality (T&H) sector. This slowdown in T&H resulted in the complete shutdown of international in-person conferences for academic disciplines. International professional conferences have over the years provided an invaluable platform for researchers, academics and students to network and exchange ideas.

In a noble effort to circumvent the hurdles of the pandemic and to restart academic dialogue, the South Asian Network for Economic Modelling (SANEM), a Dhaka think-tank, organised a three-day online international conference on October 1-3. The theme for the SANEM International Development Conference (SIDC) 2020 was "Covid-19 and Development Challenges."

While most of the 24 papers presented at the conference came from researchers working outside Bangladesh, mostly in India, the concerns they raised had direct relevance for Bangladesh. The scholars swapped ideas with each other on a diverse set of issues: policies to revive their respective economies; how to cope with a possible resurgence of Covid-19 cases; the role of stimulus support in rejuvenating an economy and the importance of effective targeting; and the impact of the emerging vaccination undertaking on a battered healthcare system next year.

One of the take-aways from the excellent papers is the validity of the familiar theme of "uniformity in diversity" and that many countries are struggling with the same headaches. An African case study highlighted an important paradox with relevance for Bangladesh. Nigeria, like many other countries, is witnessing an economic recovery, and everyone appears to have gone back to their jobs. But micro-level data also shows that job growth has been beset by shorter work hours plus less pay. In other words, people are working alright but for fewer hours and 20 percent less per hour.

The three-day zoom conference discussed a wide range of issues and offered some interesting findings from India, Nepal, Nigeria, China and other countries. For me, a big attraction was the last session, where a blue-chip panel discussed Covid-19 and development challenges in Bangladesh. The discussion brought together Francois Bourguignon, former chief economist at the World Bank, Prof Kunal Sen, Director, United Nations University World Institute for Development Economics Research (UNU-WIDER), Helsinki, and Prof Wahiduddin Mahmud and Prof Rehman Sobhan of Bangladesh.

The lively presentations and the discussions focused on setbacks suffered by many developing countries and the effect on vulnerable groups including women, school-going children and low-income earners.

There was a broad range of agreement on the impact of the pandemic and the areas that need to be addressed to guarantee the U-shaped recovery that everyone aspires to. The conferees concurred on the following propositions: weaker institutions prolong recovery, poor governance is the Achilles Heels of Bangladesh, India and Nigeria, the healthcare infrastructure was weak and has been decimated by the pandemic, and national governments need to pay special attention to vaccination distribution and administration.

Prof Rehman Sobhan did not mince words from the get-go. "The notion that exists in South Asia regarding reducing poverty, which is largely derived from improved GDP growth, has to be reconsidered."

Rehman Sobhan emphasised the inequities in our healthcare system and appealed again for a renewed effort to address this age-old problem. He also said that there should be strategies to integrate the informal sector into the formal stream and acknowledge their contributions.

Discussing the issue of poverty measurement, he said, "The Covid-19 pandemic has demonstrated the vulnerable economic status of the people living slightly over the poverty line."

Francois Bourguignon supported the viewpoints of Prof Sobhan and said, "During this crisis, the economic recession is likely to raise absolute poverty with unambiguous effects on inequality."

Kunal Sen pointed out that the pandemic has hurt the sustainable development goals (SDGs) in all areas, except one. "The Covid-19 pandemic has affected most SDGs, except SDG-13 (climate action). It has caused a reversal in gains in alleviating poverty and backtracking in globalisation," said Sen.

Prof Selim Raihan, the moderator of the panel discussion, was kind enough to invite me to ask a few questions. I asked Kunal Sen to touch on the question Abhijit Banerjee asked: Should we reformulate or reorder the 17 SDGs? On Bangladesh, my concern was triggered by a recent Bangladesh Bureau of Statistics (BBS) survey which establishes that while an economic recovery was happening, there were doubts about bounce backs of income and consumption. According to BBS, household monthly income dropped by around 20 percent while expenditures also decreased by 6.14 percent during the pandemic. While government employees and teachers suffered the least, students and labourers fared the worst. These weak spots would impede our growth next year once vaccines become available. Not only would the vaccines need to be distributed to the neediest citizens but might give rise to a logistics, storage (with dry ice) or refrigeration nightmare and overwhelm the poor health infrastructure. Also relevant were the cost and the burden of vaccination, as well as the equity of the distribution.

Obviously, it is hard to summarise all the excellent ideas and information in a short essay. Nonetheless, I will list a few in one-liners. The informal sector is vital for economic recovery and more attention needs to be paid to policies to revive this sector. All the countries, both developing and developed, are scratching their heads to come up with ideas to meet the challenge of entitlement but also to boost demand. If the public saves the stimulus checks, the economy will hurt.

The conference also provided a learning opportunity for future conference organisers. First of all, online conferences have their limitations. Conferees are able to doze off or step out of the "room" without raising hackles. Secondly, the quality of sound and available bandwidth speed can create problems. Because the network strength in different countries vary considerably, audio or video can be dropped at critical moments. Finally, participants who have to rely on the chatroom to ask a clarificatory question or "raise their hand" may often find themselves waiting for their turn when the moderators are going by the clock. On the brighter side of things, while the pandemic closed down international conferences and exchange of ideas face-to-face, researchers now have more time to connect via electronic means since travel time is zero!

Dr Abdullah Shibli is an economist and currently works in information technology. He is also Senior Research Fellow, International Sustainable Development Institute (ISDI), a think-tank in Boston, USA.