Lockdowns should not be used as the primary method for controlling Covid-19 pandemic – leading macroeconomic influencers

12 October 2020 (Last Updated October 12th, 2020 10:41)

Lockdowns should not be used as the primary method for controlling Covid-19 pandemic – leading macroeconomic influencers
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Countries across the world used lockdowns and social distancing measures to control the spread of the Covid-19 virus. The strategy, however, led to widespread unemployment, business closures and poverty. Lockdowns may not be ideal method for controlling the pandemic. Macroeconomic influencers share their views on the Covid-19 impact.

Daniel Lacalle

Daniel Lacalle, chief economist at Tressis SV, shared an article on the views expressed by officials from the World Health Organisation on avoiding lockdowns as the primary method of controlling the spread of the Covid-19 infection.

The article notes that lockdowns have produced devastating effects including poverty, job losses and business closures. Lockdowns have also led to increase in domestic violence, mental health issues and increased levels of stress and anxiety.

The officials recommend the use of focused protection wherein the most vulnerable people of the population are protected, while less vulnerable should be allowed to resume normal life.

Prof. Steve Hanke

Prof. Steve Hanke, economist at Johns Hopkins University, shared an article on how the UK National Health Institute will not be able to handle the increased number of coronavirus cases. Hospitals around the UK have approximately 500 beds but the number of patients is more than 3,100.

The UK is planning to implement tougher lockdown restrictions as the number of infections rise despite opposition from various politicians and experts. The new restrictions are expected to lead to the closure restaurants and pubs along with a 10pm hospitality curfew.

Steve Keen

Steve Keen, an economist, shared an article on how wearing masks and hygiene precautions adopted to prevent the spread of Covid-19 pandemic have helped in reducing 99.8% influenza cases in New Zealand. During the months of winter, the country witnesses at least 1,600 deaths due to influenza especially in older people with pre-existing conditions.

The precautions taken in response to Covid-19 have helped in reducing the mortality rate to 5%. Other respiratory illnesses such as the common cold and rhinoviruses, however, have not been controlled as some pathogens are not affected by such measures, the article added.

The number of influenza cases are expected to continue to remain low as the country moves into summer. The number of cases during the next year will depend on the border control responses adopted by the country, the article highlighted.

Christophe Barraud

Christophe Barraud, an economist, shared an article on how emerging markets in Asia will have to be prepared to handle the oncoming wave of ratings downgrades. After an initial slump in capital flows, emerging markets witnessed an increase in investments. However, as a second wave of infections grips the northern hemisphere, this recovery is slowing down.

The World Bank forecast in June that emerging economies will shrink by 2.5%. Government debt in emerging economies was at 34% of GDP during the last financial crisis in 2008 and at the end of 2019, it was 53%. Emerging economies are, therefore, in a much vulnerable position and at risk of a deeper crisis.

Rating agencies have been cautious in providing their ratings, with S&P Global Ratings issuing 23 downgrades or 17% of rated emerging economies. The impact of the pandemic is expected to be most on emerging economies in Asia, that were growing due to globalisation. As countries revaluate their supply chains and plan to reshore their operations, Asian economies will be most affected, the article noted.