By FORMER SENATOR ATTY. JOEY LINA
There was no stopping the apparent global panic last week over the fast-spreading deadly virus known as COVID-19.
As the World Health Organization (WHO) last Friday raised to “very high” the risk assessment of the new corona virus which has already spread to at least 49 countries, stock markets around the world were free-falling as nations struggled to contain the COVID-19 outbreak.
“Hopes that the epidemic that started in China late last year would be over in months, and that economic activity would quickly return to normal, have been shattered,” according to a Reuters report. “World shares were on course for their largest weekly fall since the 2008 financial crisis, bringing the global wipeout to $5 trillion as supply chains were disrupted, travel plans postponed and major events canceled.”
Stock markets in New York, London, Frankfurt, and elsewhere in Europe posted sharp declines last week of as much as 4.61 percent. So did Asian stock markets – “Tokyo benchmark fell by an unusually wide margin of 3.4% and Shanghai, Hong Kong and Seoul all dropped by more than 2%,” an Associated Press (AP) report said last Friday.
“Economists have forecast global growth will slip to 2.4 percent this year, the slowest since the Great Recession in 2009, and down from earlier expectations closer to 3 percent. For the United States, estimates are falling to as low as 1.7 percent growth this year, down from 2.3 percent in 2019. But if COVID-19 becomes a global pandemic, economists expect the impact could be much worse, with the US and other global economies falling into recession,” the AP added.
But even while the COVID-19 spread is not yet classified as pandemic, its impact appears to wreak havoc on the global economy.
“Amid fears about where the next outbreak of a fast-spreading new virus would appear, infections and deaths continued to rise around the globe Sunday, emptying streets of tourists and workers, shaking economies and rewriting the realities of daily life,” another AP report said. “Panic-buying of daily necessities emerged in Japan, tourist sites across Asia, Europe, and the Mideast were deserted, and governments closed schools and banned big gatherings. Amusement parks have been shuttered and concerts canceled.”
With such impact of COVID-19, some might wonder if the world is headed to a situation similar to the US Great Depression in 1929 when “downward economic spiral of reduced spending, falling confidence and lowered production” led to the stock market crash that “marked the beginning of a decade of high unemployment, poverty, deflation, plunging farm incomes, and lost opportunities for economic growth as well as for personal advancement.”
But United Nations Secretary-General António Guterres cautions against widespread panic over COVID-19. Speaking to the international press last Friday as he stressed the “importance of preparation, rather than panic,” the UN chief said: “The greatest enemy right now is not the virus. It’s fear, rumors, and stigma.”
Preparation, instead of panic, is essential indeed in tackling the onslaught of COVID-19. In the ASEAN region, Malaysia’s interim Prime Minister Mahathir Mohamad last week announced an economic stimulus package worth US $4.7 billion to mitigate the impact of the new virus to his country where 22 positive cases have been reported.
The stimulus package aims to ease the cash flow of affected businesses, assist affected individuals; and stimulate demand for travel and tourism. Hotels, travel agencies, airlines, shopping malls, conventions and exhibition centers would enjoy a 5 percent discount on monthly electricity bills. The package also includes “deferring the monthly income tax installment payments for businesses in the tourism sector and allowing the affected companies to revise their profit estimates for 2020 with respect to monthly income tax installment payments without penalty.”
Here at home, the Bangko Sentral ng Pilipinas has lowered interest rates “to pump-prime the economy by lowering the cost of borrowed funds for economic activities.” And with government encouraging domestic tourism, especially since our country so far has had no reported case of human transmission of COVID-19, local airlines have cut domestic fares, and many hotels and resorts are expected to also make enticing offers to local tourists.
Another important way to deal with economic challenges from COVID-19 is to strengthen local manufacturing. As I’ve said before, we really need to prioritize the manufacturing sector. Revitalize it. Invest resources, government or private, and provide all the necessary support to speed up its development. This includes providing incentives, government protection when reasonable and necessary to protect infant or re-emerging local industries, and education and training to provide knowledge and skills for Filipinos to enter the manufacturing sector.
The impact brought by COVID-19 to the global economy highlights the need to be ready with various measures to mitigate adverse effects. It is necessary to heed the call of the WHO when, upon raising the highest level of alert on the new virus, said: “This is a reality check for every government on the planet. Wake up. Get ready. This virus may be on its way and you need to be ready. You have a duty to your citizens, you have a duty to the world to be ready.”
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