Addressing post-pandemic crisis

Several economic think tanks are predicting that the coronavirus pandemic will ultimately cause the rise of global poverty. According to a Stratfor analyst: “Countries in lockdown due to COVID-19 now account for at least 50 percent of global gross production. This massive collapse of global business and commercial activity could have long term effects on labor markets worldwide as pandemic  induced political instability and a lack of employment opportunities affect global migration pressures.”

According to the UN International Labor Organization, the inflow of remittances account for at least one percent of GDP in more than 100 countries. World Bank statistics show that in the Philippines remittances account for at least 10 percent of GDP. The International Monetary Fund states that in recorded remittances the world sends at least $700 billion back to their home countries. However, the Fund believes that unrecorded remittances through informal channels, such as money changers, may be larger than recorded flows. It estimates that total remittances may exceed $1.7 trillion or nearly two percent of global GDP last year.

In the Philippines, overseas remittances have been usually stable sources of income for middle and lower class families. In the past, major sources of remittances have been the United States, Middle East and parts of Europe. These economies have been relatively the most stable in the world. Now these pandemic may change things.

The American economy could experience recession and double digit inflation. The oil price crash is forcing Middle East employers to send workers home. Europe’s largest economies are all under threat from recession and unemployment.

Every time there is a disaster in this country – flood, earthquakes, tsunami – the overseas have always been dependable sources of aid for many families in this country. This is mainly because they could afford to help. Now with many of them facing unemployment, will there be as much willing financial support?

In Mexico, where overseas remittances are less than 10 percent of GDP, President Andres Lopez Manual Obrador has called on the country’s citizens working in the United States to “ not stop thinking about their loved ones” back home. Mexico’s government has among the smallest COVID-19 relief packages to financially support its own citizens amid the crisis. It continues to depend on Mexico’s reliance on those cash inflows from its migrants abroad.

Unemployment is a lagging indicator of economic conditions in the country. Right now, companies are trying their best to retain as many people as possible on their payrolls. But the moment the pandemic eases and the economic recovery does not come swiftly, expect businessman to start laying off people.

Countries with fragile economies and weak economies will have to cope with high unemployment and reduced remittances. This will even have more serious consequences than natural disasters.

Disunited world

There is a noticeable failure to have a global strategy to handle the pandemic crisis. In Europe, there has been growing frictions between the Northern European and Southern European countries. However, one indicator of how the EU will act in the post pandemic world, the EU will halt exports of key food staples starting April 10 until June 30. The ban will cover a variety of cereal grains and other agricultural products and is meant to guarantee food security and keep food affordable within the EU. Countries with significant dependence on these exports – Egypt, Turkey, Central Asia – could be at risk of actual food shortages.

The Rice Tariffication Law, which most economists supported, resulted in the Philippines dependent on importation of rice. If the countries which export rice decide to increase the price of rice to make up for lost income in other areas in their economy, the Philippines will be in serious economic and political  trouble.

As we look to the future of the world in the post-pandemic era, it is clear that the world needs to have a global strategy. Unfortunately this is not going to happen. In the first place, the two potential leaders – Donald Trump and Xi Jinping – are both not trusted by the rest of the world. Trust is a necessary factor in leadership.

Questions have increasingly been asked if China’s figures on the toll of the virus on its population are reliable. There has been speculation, extrapolated from funeral urns or mobile phone closure, that the death toll could actually be in the tens or hundreds of thousands.

On the other hand, the United States under Trump, has not shown any interest in leading the world. It has focused on its narrow self-serving interests.

Pope Francis Easter message

In these dark times, once again Pope Francis was the voice giving hope to the world especially to the poor. In a letter to the members of social movements around the world, he noted that the widespread suffering caused by the global coronavirus pandemic does not fall evenly. He suggested that the widespread suffering warranted the establishment of a Universal Basic Wage. He said:

“ This may be the time to consider a universal basic wage which would acknowledge and dignify the noble and essential tasks you carry out...It would ensure and concretely achieve the ideal, at once so human and so Christian, of no worker without rights... I hope that at this time of danger will free us from operating on automatic pilot, shake our sleepy consciences and allow a humanist and ecological conversion that puts an end to the idolatry of money and places human life and dignity at the center.”

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