Response of Several Economic systems to Covid crisis

Source: IMF , Economic Times

COVID-19 has caused an economic shock three times worse than the 2008 financial crisis.
Europe and emerging markets have been hit hard economically; China has escaped a recession.
But the worst could be behind us, and a greener economy could emerge after the pandemic.
Looking at historical precedents, it’s about three times as bad as the global financial crisis of
2008 in terms of GDP decline on an annual basis. It's not quite as bad as the Great Depression
in the 1930s, where the output drop was sustained over a three to four-year period, and the
unemployment rate went up to 25% in the US. This time so far it only went up to 13% in the
US, but it’s the worst downturn we’ve had globally since the 30s.

A successful response to Covid-19 turned out to depend on more than a country’s wealth,
scientific prowess and history of public health successes. The U.S. enjoys all of these
advantages but mounted one of the worst responses to the pandemic: 1 in every 990 Americans
has died from Covid-19 since the pandemic began. Bad politics, quite simply, can trump good
public health.

Other developed countries that did well initially, such as Canada and some European nations,
have faltered during the second or third surge of infections, because their governments and
people grew tired of implementing effective strategies.

The speed of the economic bounce-back from the enormous recession of 2020 has taken many
forecasters by surprise. Output across the 38 mostly rich OECD (Organisation for Economic
 Co-operation and Development) countries combined probably surpassed its pre-pandemic level
a few months ago. The average unemployment rate across the club, at 5.7%, is in line with the
post-war average. And aggregate household income, adjusted for inflation, is above its pre-
covid level. The overall picture has been remarkably benign, even as several variants of the
coronavirus have emerged. But it hides stark differences beneath. The pandemic has created
winners and losers—and the dispersion between them is likely to persist in 2022.

In some countries, especially those where the impact of the virus was relatively slight, labour
markets did not suffer too much, allowing people to continue to earn. Japan’s unemployment
rate has barely budged since the pandemic began. By contrast, Spain’s rate rose by three
percentage points between February and August 2020.

We compare different countries based on the death toll reported, and study the economic
system that helped these countries respond better to the covid crisis.

1. Best at early action: Taiwan :

The world’s first awareness of Covid-19 came from cases among travellers arriving in Taiwan
from Wuhan, China. The country quickly halted flights from much of China, quarantined
travelers from other areas, stopped cruise ships from docking, implemented widespread testing
and quadrupled production of face masks within a month.

2. Best at learning from epidemics: Liberia (mixed economy)

Liberia, hard hit by the Ebola epidemic in 2014, was one of the first countries to
start screening for Covid-19 at airports and to adopt other control measures,
such as rapid testing, complete contact tracing and quarantine.

3. Best at crushing the curve: New Zealand (mixed economy)

Like Taiwan, New Zealand is an island, which makes it far easier to enforce travel
bans. Initial models showed that community spread of Covid-19 in New Zealand
could potentially overwhelm the health care system. Because New Zealand lacked
sufficient testing and contact tracing capacity, national leadership implemented a
countrywide lockdown in late March with the goal of eliminating Covid-19
entirely.
4. Best at testing: South Korea (mixed economy):

When it became clear that people without symptoms could spread Covid-19,
South Korea tested early and aggressively, conducting more than twice as many
tests per capita as other countries in the pandemic’s first weeks.

5. Best at quarantining: Hong Kong (mixed economy)

Hong Kong has one of the highest population densities in the world, yet it kept
cases low by establishing mandatory isolation protocols and quarantine centres.

6. Best economic protection: Denmark (mixed economy):

Some countries excelled at protecting people economically and socially. In

Denmark, the government has covered a portion of employees’ salaries in private
companies to avoid large-scale layoffs.

7. Best at public communication: Finland

A few countries have fought rumours and distrust by sharing information with the
public widely and openly. Finland, helped by its high media literacy, was able to
build on a 2014 initiative that educated people about how to counter false
information.

Conclusion:

Nazrul et.al., (2020) state that universal healthcare and social protection systems
along with improvement of governance need to be taken up as immediate tasks —
and not as distant goals — even by developing countries. It also shows that
strengthening the healthcare system of countries, where it is currently weak, is a
task not only of these countries alone but of the international community as a
whole, because globally the public healthcare system can be only as strong as it is
in the weakest country.