5 countries that will recover first after the COVID-19 pandemic
In early April, the Austrian authorities were the first in Europe to announce plans to phase out the restrictive measures associated with the crisis surrounding coronavirus infection. It is unclear who else can follow the example of Austria, but it is obvious that a return to normal will not be easy, writes Air force.
Experts have already begun to predict what it will look like when the coronavirus can be curbed, and which states will be the first to emerge from the economic recession.
The COVID-19 pandemic has added an unprecedented high element of unpredictability to the global economy. States, trying to fight the infection and stabilize the markets, are taking serious measures, including financial intervention,
10 most sustainable economies, according to the "Index of Economic Security-2019":
9. Central US
10. United Kingdom
Full list - here.
Although the victory over the virus is not yet visible, and the priority is the solution of pressing health problems and maintaining at least some economic stability, experts are already trying to look into the future and understand which countries will be the first to restart their economies.
To better understand their predictions, the BBC turned to the 2019 Economic Security Index, compiled by FM Global.
The Index ranks 130 countries in terms of their business climate resilience and resilience. The assessments are based on factors such as political stability, the success of corporate governance, the conditions for the emergence of risks, the sophistication of logistics mechanisms in trade chains, and the transparency of the business environment.
Comparing the rating of a country with its initial response to the pandemic, we identified states that are highly likely to maintain stability and economic stability throughout the crisis.
Then we talked with residents of these countries and experts to find out how they cope with the situation and what they expect from the near future.
The country ranks second in the Index, with high scores for control over the supply chain and low government corruption.
At the beginning of the crisis, the country's government acted decisively: it quickly introduced social distancing, closed schools and secondary private enterprises on March 11, and forbade entry for all foreigners on March 14 (even though there were only a few cases of coronavirus infection then).
Such measures have already proven their effectiveness.
“Compared to last year, the incidence of common influenza has decreased by 70%, which can be seen as a good indicator of the effectiveness of the steps taken by the government,” says Rasmus Christiansen, managing partner at Copenhagen travel agency Pissup Tours.
“At first I was skeptical about them, but after seeing how many states have followed the same path. Now I think that our government did everything right. ”
The Danes are used to trusting their authorities and are always ready to unite for a common cause - and this has increased the effectiveness of the measures taken.
“Samfundssind (which can be roughly translated as“ civic feeling ”or“ civic duty ”) is a new buzzword in the Danish media and social networks, and most Danes feel a moral obligation to society, believing that something should be sacrificed for the health of the whole society ”Says Christiansen.
"No one wants to be accused of actions that endanger the lives of the older generation just because they are unable to give up their usual comforts."
However, this does not mean that everything went smoothly. Say, Christiansen’s tourism business revenues plummeted. And although he speaks with gratitude about the financial assistance of the state (including partial compensation of salaries to employees), the rules for this assistance and its implementation have not yet been fully developed, which has already led to dismissals and uncertainty.
However, Danish government measures (paying 90% of salaries to hourly workers and 75% to those on salaries) are already recognized as a model for the rest of the world. These measures seem to freeze the economy until better times.
However, the Danish model is not cheap, it can cost the country up to 13% of GDP.
In addition, the Danes understand that this is a global crisis, and the stability of their economy, no doubt, depends on how the rest of the world will cope with the crisis and how others will abide by the principles of free trade.
“Denmark may be able to avoid more serious consequences and gain a relative advantage,” says Christiansen.
In fact, according to Bloomberg, the country is talking about easing some restrictions by Easter - of course, this depends on how successfully the pandemic will be contained in the future.
“Denmark has a well-developed pharmaceutical industry, which can be an advantage,” says Christiansen. "However, I will not feel proud of my country if we start to profit from the misfortunes of other states."
Singapore's ranking (21st in the "Index of Economic Security") is quite high due to a strong economy, minimal political risks, excellent infrastructure and low levels of corruption.
This country has also quickly introduced measures to contain the spread of the coronavirus. Here, the incidence growth curve is one of the smoothest in the world.
“We trust our government, every step of the way in this crisis is pretty transparent,” said local resident Constance Tan, a data analyst at Konigle. “As a rule, when the government introduces some measures, we comply with them.”
However, there are those who violate the rules of self-isolation. Passports and work passes are taken from them.
“But in general, we work together, we don't have to worry about riots brewing in society, or people dying on the streets, or economic destabilization,” Tan says.
Singapore is a small country, and the way out of the crisis will depend on the recovery of the global economy, but its residents believe in a happy future for their nation.
“Like everyone else, I believe that we will be stronger by surviving this crisis,” says Justin Fong of Singapore. “This will surely lead to the introduction of new technologies, then it will open up new prospects for Singaporeans.”
Many companies quickly adapted to new conditions and established work from home for their employees. And the government has released the Trace Together mobile app, which helps track the spread of the virus.
In order to more accurately reflect the wide geographic coverage of this country, the Index has divided it into Western, Central and Eastern regions. In general, all three occupy rather high positions in the rating (9th, 11th and 22nd places, respectively).
Controlling the spread of the virus has proven particularly difficult in metropolitan areas such as New York. The unemployment rate already shows record numbers (at the end of March - 6,6 million people), mainly due to the fact that in more than half of the states everything is closed, in particular restaurants, retail outlets and other businesses that rely on customers coming from the street.
But the US authorities quickly took incentive measures to stabilize the economy (a $ 2 trillion aid package) and introduced social distancing. Apparently, this had a certain effect. But in the end, it should mitigate the consequences of the pandemic and allow faster restoration of normal economic life.
Experts Goldman Sachs and Morgan Stanley predict a V-shaped development in the economy - first a sharp drop, and then a very quick recovery in the second half of the year.
McKinsey consultants are more restrained, but still optimistic.
The state of the US economy is important for all other countries, since it accounts for almost a quarter of world GDP. Therefore, the recovery of the global economy largely depends on how the United States handles this.
“In general, the US economy is in a better position to recover from severe crises (…) compared to other economies. The population here is, on average, younger and more mobile than the rest of the world, and labor market constraints are generally small, which helps a rapid reallocation of the workforce, ”said Eric Sims, professor of economics at the private University of Notre Dame (USA).
“In the shorter term, we can say that the US Federal Reserve and the Bank of England (they have not yet resorted to a policy of negative interest rates) have a little more room to maneuver than the central banks of other countries - say, the ECB or the Bank Japan ”.
To accelerate a return to normalcy, the US Presidential Administration proposed dividing the country into districts, highlighting those less affected by the virus and ready for a faster recovery of economic activity.
“I believe these measures go a long way toward creating the necessary conditions for a powerful recovery,” says Peter Earle, a fellow at the American Institute for Economic Research, a nonprofit think tank.
“We need the freest possible movement of money, goods, services, labor reserves and ideas - not only within the country, but throughout the world,” he emphasizes.
The lack of a universal health system in the United States has already been criticized in the days of the crisis, and this problem will be resolved if the country wants to become more protected from such pandemics in the future.
“I think in the end the whole world (including the United States) will emerge stronger from this crisis. But it all depends on what lessons we learn, ”says Michael Merrill, economist and labor market historian at the Rutgers School of Management and Labor Relations (USA).
“We will have to invest in new forms of public health and create a sustainable model of social protection and institutional resilience if we are to return to the society we lived in a month ago.”
Thanks to recent advances in corporate governance, Rwanda has significantly improved its position on the Index in recent years, jumping over 35 steps to the 77th most resilient economy in the world (fourth among African countries).
But most importantly, Rwanda has invaluable experience in fighting a similar and even more deadly virus - the country managed to prevent the spread of Ebola in 2019, when there was an outbreak of this disease in the neighboring Democratic Republic of Congo.
With universal health care, temperature measurements at border crossings, and the use of drones to deliver medicines, Rwanda appears to be well prepared to maintain stability throughout the crisis, especially when compared to its neighbors in the region.
“Lots of international students like me stayed here because we are confident that the Rwandan government will handle the situation much better than our home countries,” says Garnett Achieng, digital content manager at Baobab Consulting and student at African University of Management in Kigali, a native of Kenya.
“International students have only one cause for concern here - we are not worried about ourselves, but about families and relatives living at home in other African countries.”
Among sub-Saharan African countries, Rwanda was the first to introduce full quarantine. They deliver free food to the most vulnerable Rwandans who find themselves in isolation.
And while the tourism industry is expected to be hit hard (Rwanda is a popular destination for international conferences and exhibitions), Garnett Achieng hopes the country will have relatively few casualties from the virus, helping to quickly return to normal.
In the Index mentioned above, New Zealand is ranked 12th, with particularly high scores in corporate governance and procurement.
The authorities of this country also quickly reacted to the pandemic - on March 19 they closed the borders for foreign travelers, on March 25 they banned the work of enterprises from secondary sectors of economic activity.
“As an island nation, it is easier for us to control the borders, where the infection mainly comes from. So the border closures make sense, says Auckland resident Shamubil Ikub, an economist at the consulting firm Sense Partners. "Compared to other countries, New Zealand's response has been bold and decisive."
Strict measures are already bearing fruit: if they are followed in the next few weeks, the infection will be reduced to zero, and the country, as noted in the Guardian newspaper report, will be one of the first to return to normal life successfully.
Export and tourism are the main components of the economy of this country, so that New Zealand will have to face certain difficulties in the near future. But that's not necessarily a bad thing.
“While we are isolated, we will have time to readjust,” said Ron Bull, a resident of Dunedin, director of curriculum development at the country's oldest Otag Polytechnic University. “We were already worried about the environmental impact of unorganized tourism, and the current situation will give us time to think carefully about what is more important to us - tourists dollars or our nature.”
In general, the country has excellent chances for a stable economic recovery - the national debt is small, there is an opportunity to use the saturation of the economy with money supply and at the same time keep interest rates low.
“Most importantly, New Zealand remains a country with relatively high trust in the authorities,” says Shamubil Ikub. “This is a good foundation for recovery after our health care and economies experience the largest disruption in generations.”
Bull agrees that the country is likely to come out of the crisis stronger than it was before: “As in a large family living in the same house, everyone knows everything about each other, so now we need to sit down with our whole New Zealand family and decide who we want to be. And make decisions that will make us stronger and better. ”
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