No more status-quo after pandemic - Jomo

Travel restrictions around the globe have paralysed economies, bustling cities now resemble ghost towns while the majority of the world population is under curfew. No modern economy has experienced a crisis quite like this, according to economist Professor Dr Jomo Kwame Sundaram.

“We are not facing a normal crisis, this is not to be compared with any previous financial crisis. This is a crisis of new dimension and proportion.

“It’s also very important to recognise that it is very difficult, as trade-offs are involved when measures are being taken to deal with the crisis.

Sundaram said governments must now start planning for of a post-pandemic reality and outline what the country needs to recover from the impact of COVID-19.

"We should not just think in terms of the lockdown, but also life after the lockdown.

“How will this pandemic affect the economy, how it will affect life in general. We will see a very profound change. I don’t think we can go back to the status quo," he said on Consider This.

According to the former United Nations Assistant Secretary-General on Economic Development, Department of Economic and Social Affairs, governments must introduce new approaches to minimise the loss of economic productivity due the COVID-19 pandemic.

“We have to think of very new ways of reorganising our lives - how to ensure that we minimise the loss of productivity and to ensure that people have incomes and how they will survive in the times to come,” Sundaram said.

The COVID-19 pandemic has delivered blows to businesses, impacting almost every industry from small companies to multinational corporations. Shutdowns have forced some to change how they do work while some hardest hit industries from the coronavirus such as the airlines, hotel and the hospitality sector have started to furlough and lay off employees.

In Malaysia, the government announced a RM250 billion stimulus package to fight against economic fallout from COVID-19. The package comprise loan deferments, one-off cash assistance, credit facilities, rebates and direct fiscal injection of RM25 billion from the government. Sundaram described the package as being ‘low’ compared to stimulus packages rolled out by other countries.

“I would be very happy if the government put in more. Many people are using the correct analogy, in my view, of a ‘wartime economy’.

“This is very extraordinary. We should not constantly be looking over our shoulders and looking at credit rating agencies. I’m not saying that we spend for the sake of spending. We need to be far more targeted.

“I am especially worried about the people who depend on daily wages. It’s going to be difficult for them. Is it necessary to have a lockdown on plantations? On farms?

"For example, look at the measures introduced very successfully in the Kerala province, India. They have involved a very simple measure of ensuring physical distancing as well as sanitary measures,” Sundaram said, adding that the government should form a special council to fight COVID-19.

"It is very worrying. The Malaysian Institute of Economic Research (MIER) estimated that the worst case scenario that we might see is 2.4 million people might be unemployed. All the more reason why I think that it is extremely important that we allow people to get to work, but to get back to work as safely as possible in the circumstances."

He also suggested that the government to consider lifting the Movement Control Order (MCO) once the rate of infections slows but maintain necessary measures to ensure the pandemic remains under control.

“Physical distancing is absolutely necessary until we are able to develop a vaccine.

“We should look at how other countries are implementing lockdowns. For example, in China, not all 20 provinces were locked down. In South Korea, there has not been a lockdown. Many places in East Asia have been quite successful in terms of bringing the infection rate under control.

"Contrast this situation with the developed countries in the West, which have far superior health systems in some respect but have seen tremendous devastation because of inappropriate measures taken.

"So, we have much to learn from East Asia," he said.