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The new wave of COVID-19 since last month poses serious threats to livelihoods and the economy. Hunger and starvation hovers over a large proportion of our population as there could be further loss of employment and income that could lead to increased poverty, starvation and death.

Export capacity too could be affected adversely owing to curfew and lockdown. A deterioration in the trade balance and consequently the balance of payments would increase the country’s external financial vulnerability.

Priority

While alleviating and overcoming the emerging human tragedy of hunger is the foremost priority, the new wave of the virus and the lockdown to contain it, could disrupt production in factories and reduce the country’s export capacity. If this were to happen, the dire consequences on the country’s export economy could be unbearable.  The Government’s efforts to ensure the functioning of the economy in the midst of the spreading virus will hopefully succeed.

Unemployment poverty and starvation

The immediate and tragic consequences of the spreading coronavirus, curfew and lockdown are the loss of income for a large number of people. This is especially so for those in informal economic activities, that comprise about two thirds of the workforce, as they have lost their livelihood. Many in institutional employment, such as hotels, restaurants and other business enterprises which have downsized or closed have lost their income too.

Massive problem

This is so expansive a problem that the Government’s initiatives and interventions to assist the poor can only reach some of the starving poor. Hopefully once again there would be voluntary community efforts to reach the unreached and bridge the gap of deprivation.

External finances

The curfew in various parts of the country, and especially in the Western Province, could decrease the production and export capacity of the country. If this were to happen it would be a serious setback to hopes of an export recovery and better outcomes in the balance of trade and payments. The weak external finances of the country would reach critical levels, if the trade balance widens owing to a setback to exports.

Curfews and lockdowns

At the time of writing this, it is uncertain whether the new wave of the virus and the lockdowns to contain it, would disrupt production in factories and reduce the country’s export capacity. Although there were statements by several authorities and chamber of industries that export factories were not adversely affected, this situation could change with the rapid spreading of COVID-19 that is reported and the quarantine measures adopted.

Economy

Recognising the need to keep the wheels of industry moving, the government is adopting a multiplicity of measures to enable factory production in spite of the curfew. This is however a risky approach as several other countries realised and re-imposed restrictions to contain the spreading of the virus. There appears to be no other option but to keep the economy moving while taking precautionary measures to contain the epidemic.The success in containing the virus will ultimately determine the performance of the economy and the extent of poverty and deprivation.

Exports

The second wave of the virus could affect the economy more than the initial setback from which the country was reviving. In fact, the revival of exports to pre-corona levels was the best recent economic outcome. Since May this year monthly exports hovered around US$ one billion that was around last year’s pre-COVID monthly average of exports. Can we continue to export over US$ one billion in the next three months and expand exports in 2021?

Trade balance

The revival of exports by diversifying into new products, required by the international community, and the reduction of import expenditure gave hope for containing the trade deficit and improving the balance of payments. The pertinent question now is whether the new wave of the epidemic would affect industrial production and exports?Can we revive exports in this context of social and economic disruption?

Summing up

The country is facing severe threats to people’s livelihoods and external finances. Ensuring food to people affected by the curfew and lockdown is undoubtedly the priority. It is however costly and difficult to implement. Many of the deserving poor and unemployed may not receive the benefits, while unintended beneficiaries could be large. Community efforts to provide relief must supplement the Government’s efforts to prevent hunger, starvation, disease and death.

The disruption of the economy, especially where exports, are concerned is a severe blow. Reduced exports could worsen trade and the balance of payments and worsen the external vulnerability of the economy. This in turn could threaten the availability of adequate food and necessities like medicines.

Final word

Hard times are ahead if the pandemic is not contained within the island and across the globe.