Covid-19 and the challenges we are in

The magnitude of the impact of Covid-19 on our lives is unprecedented. We cannot compare Covid-19 with previous pandemics due to the dramatic increase in the scale of globalisation in economic, technological, and political spheres. 

Though connectivity is one of the characteristics of globalisation, the increased people-to-people connectivity has now backfired on us, as it has greatly aided the spread of this virus. 

Recognising the danger, countries all over the world have imposed travel restrictions at various times. Countries also imposed trade restrictions, bringing the global economy to its knees. 

I believe that the emergence of Covid-19 has forced developing countries such as Bangladesh to think differently, because it presents a new set of challenges. Export and remittance are the two main economic pillars of the Bangladesh economy. 

But these pillars are heavily dependent on connectivity. As the global connectivity scenario has been challenged heavily by the pandemic, the medium to long term prospects of these driving factors will remain uncertain. 

Connectivity, on the other hand, includes the aspect of digital connectivity. This pandemic has strengthened the grip of digital connectivity in our lives, and it will only become robust in the future. 

The question is: are we in a position to enjoy the advantage of the advancement of digital connectivity and the digital revolution? 

There has been much discussion about the fourth industrial revolution (4IR), and the general belief was that developing countries like ours would face numerous challenges once the 4IR began. 

I believe that the pandemic has and will continue to speed up the overall process of the fourth industrial revolution. 

As a result, our concern for addressing the challenges we may face during the fourth industrial revolution, such as the large-scale loss of jobs, will be much more acute.

It has also served as a wake-up call to the world that we may face more dangerous viruses in the future and that we must begin planning for them right away. 

I believe it has compelled us to place a greater emphasis on many issues that the world was already working to address, such as climate change.   

Covid-19 has made it abundantly clear that our healthcare system urgently requires attention. There is no denying that our healthcare system was not ready to deal with a global crisis like the one we are currently experiencing. 

Surprisingly, the situation is similar in many other developed countries. However, this does not change the fact that the healthcare system, resources and institutional mechanisms in these developed countries are far superior to ours. 

As a result, these countries could vaccinate people much more quickly. If developing countries do not invest in their healthcare systems, especially in public healthcare, these countries will continue to struggle to recover from the devastation caused by this pandemic.

In our country, the amount of money spent on the public healthcare system is too small. Consequently, people must bear their medical expenses, and the out-of-pocket health spending in Bangladesh is one of the highest in the world. 

Our frail healthcare system cannot even handle non-covid health complications during the ongoing pandemic. It is worth noting that the private healthcare sector collapses in such a health crisis. 

During the early days of the Covid, private hospitals refused to accept patients, and it took a long time for them to come up with a mechanism.

As a result, investment in the public healthcare sector is a must and needs quick actions. Reform in the health sector is also required. In the national budget, in June last year, though the government increased the allocation for the public healthcare system by around 100%, the government failed to spend the whole amount. 

The national budget for this year also maintained the increased allocation for public healthcare. But I am concerned that we will see the repetition of the same story this year. 

At the district level, there is a severe shortage of ICU beds. As a result, people rush to Dhaka for treatment. If our healthcare system is in such disrepair, how can we expect it to provide even necessary healthcare services to all? No doubt, we will not be able to achieve the SDGs with such a public healthcare system. 

Therefore, the lesson to take from this is that we will have to spend a lot on the public healthcare system, make necessary reforms, and employ qualified people at different stages. 

We will have to create an integrated healthcare system where basic and advanced health services are effectively regulated and delivered. Otherwise, we will not be able to achieve our larger development goals. 

There is no denying that vaccination will play a critical role in the national and global economic recovery processes. If the recovery is to be sustainable, access to and fair distribution of vaccines will be essential. 

However, insufficient national initiatives and global and regional politics are impeding this process. In this regard, we need effective national initiatives and strong cooperation among countries.

Bangladesh has witnessed a dramatic rise in the poverty rate during Covid, which is clear from various surveys, including some we conducted from SANEM. During Covid, a substantial number of people fell below the poverty line and became newly poor.  

Therefore, it is critical to assess how these new poor people, and those living below the poverty line before the Covid, are coping with the crisis. 

They are, in my opinion, making an intergenerational adjustment with high adjustment costs. They are putting greater importance on their current survival rather than future consumption or savings. 

Consequently, their future is becoming uncertain, and the impact of this shift in importance will have disastrous consequences in the days ahead. 

Cuts in costs for health, education, and entertainment for their children, for example, will result in lower productivity of future generations. All these will affect the future economic growth and development of our economy.

However, if the government provides the necessary support through different social safety net programmes, affected households can mitigate much of these intergenerational adjustment costs. But the government's support for the poor people has remained very inadequate in our country. 

For example, social safety net programmes in Bangladesh seriously suffer from exclusion and inclusion errors. The exclusion error is because people who should receive social protection do not receive it. And the inclusion error is because people who are not supposed to be on the list receive the support. 

This year's budget has failed to acknowledge those who have become newly poor. If a situation is not even acknowledged, how will the government provide support? As such, there is a significant lack of support for the people who fall under the new poor category. 

Another important point to mention here is that our government has put forward several stimulus packages to boost economic growth during Covid. 

Recovery, in my opinion, is only given a limited interpretation. Recovery has two components: economic recovery and social recovery. Policymakers are primarily concerned with the economic recovery aspect. 

There is little discussion of social recovery. Discussion on social recovery should include how to address poverty, particularly the new poor, as well as the labour market, which has been severely disrupted. 

For example, even in our country, where approximately 85% of the labour force is employed in informal jobs, there is no stimulus package in place to address the informal sector, and the number of packages for the labour market, in general, is very low.

More specifically, we have seen that the urban labour market has been highly disrupted because of covid. But we do not have many social protection programmes targeting the urban labour market and the urban new poor. 

I believe that if we do not address the gaps in our social recovery program, we will not be able to achieve full economic recovery. 

Returning to the point of economic recovery, there are some significant challenges associated with the distribution of stimulus packages, particularly in terms of who will receive these packages. There are strong biases present here, as those who receive these packages are mostly connected to political and economic elites. 

Those without strong connections, particularly micro, small and medium enterprises, are overlooked despite playing an important role in the supply chain of various sectors. 

However, it is high time to take steps to ensure that the obstacles to extending assistance to these enterprises are removed, or else our overall economic recovery will be threatened. 

During the ongoing pandemic, there has also been a rise in inequality. Several studies, including some from SANEM, show that the emergence of this pandemic has exacerbated inequality between people and countries. 

For example, in terms of education in Bangladesh during Covid, SANEM's study discovered that only 20% of students have proper access to the facilities that would allow them to participate in the online classes. 

So, if the government does not take the initiative to ensure equitable distribution of these digital facilities, inequality in our country will reach unprecedented proportions.

To summarise, the ongoing pandemic has brought with it a slew of new developmental challenges for the world and our country, which must be addressed with utmost urgency. If we fail to do so, the world will never be able to return to its pre-covid state. God forbid, it may even find itself in much more difficult situations than we are currently facing. 

The author is a professor in the Department of Economics at the University of Dhaka and the Executive Director of the South Asian Network on Economic Modeling (SANEM). He can be reached at selim.raihan@gmail.com.