Next phase of the fight

Pakistan entered yet more uncharted territory in this unprecedented fight against the coronavirus on Tuesday when the federal government allowed some select industries to reopen while extending the lockdown by another two weeks. Everybody understands all the merits in the argument favouring a complete ban on all activity for a little while longer, of course, but it's also become pretty clear that the economy would now have to get going for the lockdown itself to make any sense. And, when one policy option could mean deaths by pandemic and another could lead to deaths by starvation, the federal government has opted relaxation in the lockdown for generation of incomes and employment immediately. Besides, it's not as if everything will be nice and normal once the threat from the coronavirus goes away. With the economy dipping into recession, growth turning negative and chances of the poverty rate doubling, the government can't just sit on its hands and wait for the storm to pass. This pandemic has set off a time bomb in the economy and only very timely action will limit the damage. Even in the best case scenario, the country will need large amounts of foreign debt write-offs and new debt for years to come to get back on its feet.

Pakistan, which was upgraded from a frontier economy to an emerging market in 2017, does not have the depth to survive economic paralysis, even for very brief periods of time. And the decade or so since the great recession of 2008-09 has been one of relatively low growth for the country. The last couple of years have been especially painful with industry slowing and unemployment consistently rising. That is why we were not prepared at all to deal with a lockdown and at the same time provide relief packages to different income groups on a sustained basis. In countries that lack formal government financial safety nets, like ours, lockdown can and does very quickly mean widespread hunger and starvation leading to social defiance of the lockdown.

Yet the necessity of opening up the economy comes with very serious risks, and this strategy will not succeed unless the people play a very significant part. It will be very important to maintain the balance between those that must go out to work so that selected industries can function and those that do not need to be out on the streets. It is, of course, a very real possibility that the virus could spread among factory workers, in which case everything would have to be shut down once again; perhaps for even longer. That is why all unnecessary movement must be completely discouraged till this next, extremely important, stage passes. Very soon it will become clear whether the rewards, of taking these baby steps towards opening the economy were worth the risk. The process must not be compromised because some people are simply unwilling to follow safety instructions.

A number of countries across the world, including those with far higher numbers of infected and dead than Pakistan, are also contemplating taking the gambit of slowly relaxing their lockdowns. It is now just a question of muddling through till the threat either plateaus on its own or a vaccine can be produced and brought to the market; neither of which seems likely anytime soon. Emerging markets are quite naturally being hit much harder from all sides by forces that are completely beyond their control. They are forced to stop production while foreign investment has already left in bulk and international trade is extremely restricted. That is why their response to the pandemic has its limitations. Now, the time has come for them to pick one of two very difficult options. One is getting back to work slowly, which carries the risk of an out-of-control outbreak that can quickly overwhelm healthcare facilities and bring the economy to a stop once again. And the other is keeping shutters down till the curve flattens, at least, even though that will definitely mean a large number of deaths from hunger and starvation among the poor and the prospect of large numbers of have-nots descending upon the streets in protest.

In Pakistan, the difficulty in making this choice can be seen in the different positions of the Sindh and federal governments on the matter of diluting the lockdown. Chief Minister Murad Ali Shah would have liked to keep a lid on things for a few more weeks, but the federal government is of the view that the country can no longer afford to keep the economy on the backburner any longer.