Singapore, 29 June 2020
The year 2020 is one for the history books. It has given us an unprecedented worldwide health and humanitarian crisis, which has led to the worst economic catastrophe since the Great Depression almost a century ago.
Even in the most optimistic scenario—if we see a partial recovery at mid-year—the APEC region’s economy is projected to contract by 2.7 percent in 2020. That is a loss of economic output worth USD 2.1 trillion, two times the GDP of Malaysia in 2019.
For families and individuals, this means lost livelihoods. Unemployment in APEC economies is expected to increase from 3.8 percent in 2019 to 5.4 percent in 2020, which translates to about 81 million people who are jobless this year (23 million more than last year)—again, this is if we count upon an optimistic scenario wherein we start seeing a recovery right about now.
The APEC region has not faced GDP and job loss at this scale since the Global Financial Crisis more than a decade ago, and even then the region managed to achieve positive growth.
[Related reading for job loss: COVID-19, 4IR, and the Future of Work.]
And yet, while there is no denying how catastrophic its effects will be on the lives of everyone, COVID-19 can be seen as an opportunity.
The virus has not only exposed our deficiencies in healthcare access and capacity, but it has also made it clear that our economies are inequitable, unsustainable, and fragile. We need to rethink how we do things, how we relate to each other, and what we value. In short, after COVID-19, we need to reinvent our economies and societies.
Crisis can be an opportunity for change for the better. In photo: A 120 m long model of the 17th century London skyline burns to ashes to mark the 350th anniversary of the 1666 Great Fire of London. After the fire, London was rebuilt better and more resilient.
Governments have already put in place extraordinary measures in support of those adversely affected by the downturn, whether they are endangered businesses or households. Economies with adequate healthcare and social protection coverage are now reaping the benefits of their investment, while those that don’t are having to compensate with ad hoc support.
Some of the fiscal and monetary policy support packages announced by governments have reached up to 20 percent of GDP in some economies. Governments have had to dig deep and find the necessary resources to provide these extraordinary assistance packages to households and businesses. In some economies, years of efficient tax management and investment in economic resilience have paid off in the form of reserves that can be used in the recovery. In most economies, however, these necessary support measures will have to be in turn supported by debt and future revenue flows.
In May I attended an online-only seminar about how to prepare for the post-pandemic recovery. As an analyst from the APEC Policy Support Unit, I was there to talk about the pandemic’s effect on APEC economies—which are collectively facing the full brunt of the crisis in many fronts—and how to move forward.
[Related reading for effects on the region: APEC in the Epicentre of the COVID-19.]
To illustrate my point I brought up a crisis that happened thousands of miles from any APEC economy, hundreds of years ago: the Great Fire of London in 1666.
In the 17th Century, London was crowded, narrow, and dirty. Wooden houses were close to each other, and there were limited provisions for basic services such as fire brigades.
After the fire subsided, one-fifth of the city’s population has homeless. In the aftermath, the regent ordered London rebuilt, not as it was, but with proper urban planning and provisions for public services.
The city was rebuilt better and more resilient, which positioned it to take advantage of the Industrial Revolution that was to happen a century later, building the foundation of the world economy as we know it today.
In the world before COVID-19, the APEC region was already grappling with rising inequality and income gaps, which fed anti-globalization sentiment that eventually led to the trade and technological tensions we are experiencing today.
When COVID-19 came into the picture the negative effects of inequality and lack of access to basic services were harshly laid bare. It is hard to control a pandemic if not everyone who needs to be tested or cured has access to healthcare, or if people fear impoverishment due to hospitalization. It is unrealistic to ask people to stay at home if they have no income or safety nets to let them survive periods of self-isolation. Poorly paid nurses, grocery workers, and delivery drivers are today’s frontline heroes. Policies that were once inconceivable—such as universal basic income and healthcare for all—are now being tested by governments around the region.
We used to value profit over equity. We used to value wealth over health. We used to measure progress in dollars and not in lives and livelihoods. All this will have to change.
The post-crisis recovery is not a time to go back to business-as-usual. It is a time to learn from the shortcomings of the past, improve the narrative of trade and investment, and develop economies that are inclusive, sustainable, and resilient. This is a time to rethink and rebuild better.
Emmanuel San Andres is an analyst at the APEC Policy Support Unit. He is the co-author of numerous policy briefs and reports, including APEC in the Epicentre of COVID-19; COVID-19, 4IR, and the Future of Work; and the latest APEC Regional Trends Analysis.