Economic recovery will depend on overcoming health crisis, say experts | Sunday Observer

Economic recovery will depend on overcoming health crisis, say experts

3 January, 2021

The fight against Covid-19 has been widely framed as a trade-off between managing the ongoing public health crisis and salvaging the economy.

Public health and economic thought leaders now indicate that this a false dichotomy. Speaking at the fourth Annual Asia Securities Sri Lanka Investment Conference, an expert panel comprising Prof. Neelika Malavige, University of Sri Jayewardenepura; Dr. Ravindra P. Rannan-Eliya, Institute for Health Policy; and Dr. Dushni Weerakoon, Institute of Policy Studies of Sri Lanka, agreed that any lasting economic recovery will depend on resolving the Covid-19 health crisis.

The virtual conference titled “2021: The Investors’ Dilemma” hosted by Asia Securities, an investment banking and wealth management firm, was held recently. Dr. Ravindra P. Rannan-Eliya said, “Data shows countries that have successfully eradicated Covid-19 outbreaks and brought them under control, are those that have aggressively increased PCR testing capacity. A vaccine, on the other hand, wouldn’t be as effective, because dosage volumes, especially for countries like Sri Lanka, would not be sufficient to achieve adequate herd immunity.”

“When we speak of the efficacy of the current vaccines, this only refers to the prevention of symptoms and death in people, so it does not refer to prevention of transmission. This is not enough to curb the pandemic within the next 1-2 years so second-generation vaccines are essential,” he said.

Commenting on the Ministry of Tourism’s decision to open the airports, he said that it is vital for Sri Lanka keep its borders closed for the time being to protect businesses.  Prof. Neelika Malavige said, “The ‘Covax Program’ will cover 20% of the population and is expected to come in August/September 2021. The country will first receive 10% of the vaccines and remainder will arrive the following year. However, given the limited quantities of the vaccine, stopping transmission may not be possible.”

She said the Government is exploring the possibility of purchasing vaccines outside the WHO’s Covax Program, directly from the manufacturer. The government is also exploring the possibility of getting the private sector more involved through management and vaccines (at regulated prices). Elaborating on the government’s intention to expand the mass testing program, Prof. Malavige said, “Testing capacity, which is currently operating at 14,000 tests per day, is expected to reach 40,000 - 50,000 tests per day in approximately a month.”

Dr. Dushni Weerakoon said that while the Government has a medium-term policy framework in place, it now needs to look towards bridging the financing gaps created by high levels of public debt and widening fiscal deficits. She stressed that definitive plans are vital to boost investor confidence and maintain macroeconomic stability.

“The initial impact to the economy from Covid-19 was a supply side shock. Now what we see is a demand side shock. People are not spending due to concern on livelihoods. To drive economic growth in the next year will require people going back into employment. However, the health risks are high, especially given that almost 68% of the labour market is from the informal sector. There will have to be a strong public health message that goes out to those workers to give them a sense of confidence that going back to work is not putting their lives at risk.”

Asia Securities Chairman Dumith Fernando, said, “In the current context, it’s quite important for us to not only understand what the next year would be like, but also dig deep into the continuing effects of what happened in 2020. The outline of the conference is going to be around the remnants of the turbulence that occurred in 2020, particularly related to the pandemic and understanding the root causes that would assist a recovery. Without really understanding the issues and the path to recovery of the ‘medical problem’ it would be hard to understand the economic impact and the investment challenges going into 2021.”