Investments in various sectors crucial to economic rebuilding

CEBU, Philippines — Strong investments in education, health, and social protection will play a very critical role in economic rebuilding, especially in developing and poor countries like the Philippines.

“COVID-19 has disproportionately struck poorer households and medium, small, and micro enterprises (MSMEs) with few resources to cushion the blow due to weak social safety nets, lower levels of financial access, and lack of health coverage. Strong investments in education, health, and social protection will be critical to this effort, while also focusing on gender equality,” said Masatsugu Asakawa, Asian Development Bank (ADB) president, during the recently held virtual three-day 2020 Asian Development Bank Institute (ADBI) Annual Conference on December 1, 2020.

According to Masatsugi, while ADB expects developing Asia to rebound strongly by 6.8 percent next year, “we cannot anticipate a V-shaped recovery, as it will take some time for countries to recover to pre-pandemic levels of GDP growth.”

As the end of 2020 is approaching, ADB dean Tetsushi Sonobe said economic experts are still wondering how long COVID-19 threat will last—how the livelihoods of people will be in the next year in our countries and other parts of the world, especially vulnerable groups. What kind of economic recovery will take place—whether “we can really expect to build back better and whether the Sustainable Development Goals can be achieved? The answers to these questions depend much on what people, governments, and the international community do next.”

According to Raghuram Rajan, Professor of Finance, University of Chicago Booth School of Business and former Governor, Reserve Bank of India, the real concern is not this year (2020) but next year, “as we start seeing the longer term level of sustainable demand, but also as we see support to the economy come off, as support to credit comes off, who really is viable and who is not. It could be a very different story at that point which is why it is very important to prepare right now, especially when the markets are so buoyant.”

“We have buoyant markets. We should make use of them. In this process, let us prepare for the corporate repair and reallocation that are really necessary as we go forward, both for the issues of equity but also for the long-term sustainable growth we that desperately need once the pandemic is over,” Rajan added.

Meanwhile, however each government in the Asian region will play their cards on recovery building, what is apparent is Asia will emerge from the current crisis as a more resilient region, Sanobe assured.