The COVID-19 pandemic is the greatest challenge of this generation thus far. But pandemics are not new. A century ago, the influenza epidemic of 1918-1920 wreaked similar havoc. Strong emphasis was placed on social distancing at that time, but the saving of lives and recovery of livelihoods were constrained by a nascent and limited multilateral architecture and very few technological options.
In contrast to a century ago, there is a much greater arsenal of weapons available to countries in Asia and the Pacific to address the issues arising from the current pandemic. Regional cooperation holds great promise. Pandemics do not respect borders, so the pathway to saving lives and securing livelihoods lies not in national isolation, but in cooperating across borders on information sharing, capacity building, and policy coordination. The digital economy is the best means of working together while minimizing physical contact.
In the short term, Asia and the Pacific governments’ emergency assistance packages, many of them supported by the Asian Development Bank (ADB), are helping build health system capacity and providing necessities for the poorest households. However, as had happened in the influenza epidemic in 1918-1920, repeated waves are possible. In the medium term, therefore, we need to strengthen countries’ resilience and find ways to begin recovery and sustain development progress. For these purposes, ADB has announced a $20 billion pandemic response package to support these efforts.
Pandemics do not respect borders, so the pathway to saving lives and securing livelihoods lies not in national isolation, but in cooperating across borders on information sharing, capacity building, and policy coordination.
Developing Asia’s Immediate Response Measures
ADB has built a database that contains information about the measures that its members have taken to combat the pandemic. Asian governments and central banks have acted swiftly and decisively. Data collected until early May 2020 indicate that ADB’s developing member countries have committed $1.9 trillion (substantially more if we include Asia’s advanced economies) in the form of:
actions to support normal functioning of money markets and short-term lending,
encouraging private credit creation,
long-term lending to the nonfinancial sector,
equity claims on the private sector, and
direct support to income/revenue.
This amount represents about 8 percent of their combined GDP. The packages committed will be decisive for supporting Asia’s comeback. Moreover, to maximize the activation of the transformative tools of regional cooperation, digital economy, and financing, ADB and its partners are planning a recovery strategy focused on “building back better, differently, and together.”
Building Back Better
Past pandemics have shown that social distancing is important but costly. To minimize its economic costs, it is critical to build better. This will require making lockdowns “smarter” through testing, tracing, and isolation.
Significant investments need to be made for this. ADB can support countries with weak individual purchasing power and capacity and procure them through regional pooling. ADB has experience of the power of such collective action, for example, in the Pacific region. In the medium term, countries will need to build regional disease surveillance, rapid response teams to investigate disease outbreaks, and coordination mechanisms for harmonizing regional treatment protocols and registration of medicines. ADB is already working through existing regional platforms (ADB serves as the Secretariat for the Greater Mekong Subregional Economic Cooperation Program, the Central Asian Regional Economic Cooperation Program, and the South Asia Subregional Economic Cooperation Program) to build systems and improve the use of digital disease surveillance information and for e-health services.
Building Back Differently
Over the past 50 years, the region has become more integrated on the back of improved physical connectivity. This has not only driven economic growth but also built resilience. The pandemic threatens this progress.
The need of the hour is for countries to build differently the infrastructure required to overcome health risks that come alongside connectivity. For example, using regional traveler databases or mobile health certificates showing travelers’ COVID-19 status could be rolled out to operate in real time.
Past health crises also highlighted the importance of investing in decongesting cities and making them more livable. This time around, the decongestion of urban development in major cities through trade and transport links to hinterlands in economic corridors will be key.
Building Back Together
Trade and investment had been important drivers of Asian growth and will remain so during the recovery period. Before the pandemic started, we were seeing stress buildup in the multilateral trading system and a move towards increased protectionism.
The crisis, however, has shown that whether it be trade in food or medical equipment, trade increases resilience. The People’s Republic of China, for example, is the largest producer of personal protective equipment, but 55 percent of the demand comes from the US and Europe. We need to restart trade, but this time around, we also need to build together. South and Central Asia need to become better integrated with the rest of Asia, and Asia with the rest of the world.
Greater attention also needs to be paid to building resilience in sectors such as agriculture and small- and medium-sized enterprises (SMEs) hit hard by the pandemic. This is important not only because the sectors provide a livelihood for a majority of poor, and especially for women-owned businesses, but also because they are storehouses of economic dynamism and critical links in supply chains.
We are faced with a new normal. Public and private resources are stretched worldwide. We need to maximize the impact of every investment we make to save lives and secure livelihoods. However, the COVID-19 crisis can also be used as an opportunity to accelerate change and transform the economy using 21st-century tools.