The socioeconomic cost of the Covid-19 Pandemic

The Coronavirus first made its presence felt in China in early November 2019 and since then we have had more than 11.3 million cases and over 532 thousand deaths across the world. It has been with us for more than six months with the scientific community still uncertain about the cure and the possibility of a second wave  of infections. Countries around the world have been pushed to follow self-imposed economic restrictions, including production and commerce. The larger the informal economy in a country, the more jobs lost and economic hardship. The recession that has been predicated is unique in that it is not market led but has been forced on the market by other factors. Financial institutions have not failed nor have governments failed, and yet the economies have been forced to stop. 

Even as healthcare officials battle the virus, with the prognosis that the pandemic will gain strength, there seems to be some optimism within economic institutions as restrictions are lifted and the global economic order limps back to life. The cost of this opening is being calculated against the cost of not opening. Until now, countries that have lifted restrictions on movement and economic activities have witnessed a rise in the number of cases. But costs, especially for developing countries that have limited or restricted subsidised social care would be higher. Job and income loss are the most visible signs of stress. This would translate to more savings and less buying and prove to be detrimental to consumers serving businesses such as telecommunication companies, retailers and utilities. Apart from the economic costs of the pandemic, there is a larger social cost that needs attention. An immediate effect of restriction and loss of income would be on nutrition and health care of women and children, especially girls. A second important social cost that needs to be a factor is in education. As income stagnates, with less prospects of growth, education of children would be restricted or stopped completely. “UNESCO estimates these nationwide closures are impacting over 60 percent of the world’s student population. Several other countries have implemented localised closures impacting millions of additional learners”.

It has also had a significant impact on childcare costs for families with young children. Additionally, there exists a wide disparity amongst populations who have the financial capacity to continue their education with the help of digital technology and those who have no such access. This disparity will affect upward social mobility. An unhealthy, poorly educated young population is not in the interest of any nation and will negatively impact economic health in the long term. 

As nations announce stimulus packages, there is a need to understand and assess the impact of the pandemic on the societies and the most vulnerable people within it. Nations have to come together to build partnerships to strengthen health systems and extend health and social protection coverage for all citizens. The responses that are being made factor in their needs and ensure that no one is left behind in this effort. 

 

About the author:

Dr. Stuti Banerjee is a Research Fellow at the Indian Council of World Affairs, New Delhi. At the Council, Dr. Banerjee is engaged in research on U.S. and Latin America & the Caribbean, the Indo-Pacific and the Arctic. This includes producing analytical articles on the politics, economy and strategic issues of the region. She is also engaged in providing policy recommendations papers for concerned departments of the government.

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