eBusiness Weekly
Elias Pacheso
A week is a long time in today’s fast changing environment. This week was particularly difficult for me as an economist. As we tried to grapple with what the managed float system announced by the Ministry of Finance and Economic Development means and how it will work, it was being reported that cases of the coronavirus had been recorded in parts of Southern Africa.
Suspected cases were being tested in our own country. This is one of the most difficult things to foresee or prepare for! These are the exogenous factors. These are things you have very little control over. With the Government announcing a raft of measures to try and fix the economy last week, an ugly cloud hung over the world this week as the coronavirus spread into Africa. As an economist one of things they ask you is “What impact will this virus have on the local economy?”
As of March 17, 2020, the disease had killed 7 426 and been reported in more than 150 countries globally according to the Ministry of Health and Child Welfare. The world is so connected that it is difficult to isolate oneself, more so when the success of any country depends on its openness. The lesson from this current crisis is that information is important, especially today when there are so many ways of spreading it.
As an economist to cope with the information overload, I have had to slow down on my social media access. Has it worked? Not really! But I have learnt to find more trustworthy sources of news. Wherever you turn there is COVID-19 this, corona that. It’s hard to ignore, so this week I will try and unpack what these viruses mean to our economy and our future policies.
I don’t have a crystal ball, but I will try and stick to “facts”. It’s important to avoid heresy in this environment where significant decisions will need to be made by everyone, households and businesses alike. These decisions will impact on the economy in so many imaginable ways.
If we are to see what has been happening to the hardest hit countries where borders have been closed, it is not difficult to imagine the losses being made and the disruption that’s coming across many supply chains.
Naturally, when something that we don’t understand happens panic sets in and it’s very easy to make bad decisions that can haunt a household and nation for years to come. It is important to keep calm and keep a clear head.
Planning becomes very important and this is where any government or household needs to put on the planning cap. What is coming to us? How will it affect us? Who will be affected the most? What can we do to limit the damage? What can be done in the short term? What do we need to do in the long term to prepare for things we can’t control? I am sure you can see where I am going with this.
With the Government announcing measures to control the spread of the virus by banning unnecessary/avoidable public gatherings it’s clear that any business that relies on such gatherings will suffer.
Tourism relies on travellers and the world has seen a dramatic drop in flights especially from hardest hit countries. Every economy goes through cycles and this particular cycle is affecting the whole world. As a country, we must always be aware of this and plan the worst that can happen.
The coronavirus has been a wakeup call for everyone in the world. There is a lot that we take for granted in our daily lives. As the situation unfolded in China where new cases are on the decline, it was easy to think that the disease would not spread as fast as it has to many countries in the world.
As highlighted earlier with the world being so interconnected, everyone is affected in one way or the other by this disease. Rather than divide the world I expect to see better coordination and communication in the future.
What part can we all play? It is clear that the disease is taking its toll on the markets as commodity and stock market prices have crashed, in anticipation of a world recession. Overnight billions of dollars have been wiped off the markets and it’s important to remember that there are up and down cycles.
We will weather the storm and look back and learn from the spread of the disease. Can we prepare better? Yes, we can, by creating strong institutions with strong response mechanisms.
Worldwide we have all been stunned by the scale of the economic meltdown arising from the COVID-19 virus. As it unfolds closer to home it’s important for us to learn from others who have been dealing with it how we can be better prepared. The psychological costs of any unforeseen events is often the worst to deal with and often results in negative thinking and perceptions. Many countries are going through this phase right now.
My advice to policy makers is to anticipate all these problems and realise that extraordinary measures will be required to lift the country and restore positive sentiment in the economy after this is over. Clearly, small business owners and workers will suffer the most over the coming few weeks, as economic activity slows down.
Big businesses will also suffer and those that can must find ways of ensuring that both staff and customers are well supported in this difficult time.
We must all come up with ideas to make life easier for everyone. These are not ordinary times. They call for extraordinary measures. While a lot of efforts are being placed on education the public through the following points by the Ministry of Health:
l Exercise good personal hygiene
l Wash hands with soap and water frequently
l Cough or sneeze into a tissue or flexed elbow then through the tissue in a bin
l Avoid touching your eyes, nose or mouth
l Avoid close contact with people who are sick, coughing or sneezing
Additional effort should be placed on helping people cope with the anxiety that the disease is causing. My personal advice to anyone using social media is avoid sharing unverified information as this can cause speculation and further anxiety.
It will be hard to recover psychologically, and this has dire consequences on the economy in the short to medium term.
Stay positive and continue to exercise good personal hygiene. Small economies like ours will have to dig deeper to stimulate economic activities and growth. Don’t take unnecessary trips and avoid putting others at risk if you are not feeling too good.
Pacheso is an experienced economist with more than 18 years experience in the financial services sector. He enjoys mentoring start-ups in his spare time.
