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Reasons to be optimistic about the economic prospects for 2021
End of the year op-eds, or the thought of it, bring for me anxiety as well as joy. I feel anxious because I can’t decide what to write about, or find issues to vent about, as the year draws to a close. Should I pen an essay based on the economic forecasts for the coming year; a reflection on the year that went by; or another wish-list, or something else? I also experience a sense of joy because I am eager to share with my readers my feelings and anticipation at the end of the year, as you might do with your family or close friends. Different ideas start floating in my head: how about a chronicle of the victories I notched up, describing in details the mountains I climbed; or should it be about my dreams and what I am looking forward to next year, e.g., the Summer Olympics, trips I hope to take to China to teach the class that was cancelled last summer because of the pandemic, or an outline of the post-Covid world that I foresee?
I could also write a summary of the major events of the previous year. My friend, Geoff Lantos, professor of marketing, every year, sends along with his New Year’s card a typed page or two providing details of the vacations he took or the major events that happened in his life in the previous 12 months and the highlights of the courses he taught. I could do the same and talk about the economic ups and downs, the US presidential elections and the post-election uncertainties, and the high points and low points in the bygone year for the world community. Like Geoff, I could throw in a few interesting and comic moments that happened too: a comparison of the 1918-19 Spanish Flu and the 2020 Covid-19 pandemics; the shouting match between Modi and Rahul Gandhi; the lockdown in India, and other titbits. Incidentally, it is estimated that about 500 million people or one-third of the world’s population became infected with H1N1 virus, and nearly 50 million died in comparison with 2.7 million deaths projected for Covid-19.
But, as you can guess I am again dilly-dallying, and I finally looked at my shortlist and picked two topics. i) Why I think the worst of the economic woes brought about by the pandemic are over; and ii) What we can do as a community to do better next year. There are three reasons why economic recovery is on its way: the availability of the Covid-19 vaccines, an uptick in commerce, and an abundance of pent-up consumer demand which is likely to push the world economic engine forward. The second topic, i.e. “What can we do to make 2021 a better year?” begets some easy answers. Some of the well-known measures are: i) The world leaders and all governments need to make vaccines available to everybody; ii) There is an urgent need to support and help the recovery of badly affected sections of our population; and iii) Everyone needs to proceed with caution since economic recovery is but a goal and is not inevitable. We need to work hard, and as they say, “noblesse oblige”.
There is much evidence and talk nowadays about each aspect of the above-mentioned topics I selected. For example, let us consider the uptick in commerce. There is ample data from the last three quarters to point to a gradual but sustained growth in commerce and global trade since the early days of the outbreak of the pandemic. And, some soothsayers are even saying that the next few years could see a re-enactment of the “Roaring Twenties”, a reference to the booming economy of the 1920s that followed the end of the Spanish Flu.
Let us take the case to “Support the Needy”. The pandemic and the lockdown has caused a partial collapse of the informal sector, and harmed the rural areas in Bangladesh. Urban dwellers with a steady job may be doing well but everywhere I look there is a feeling of despondency and penury. It is hard to estimate what percentage of our people have been adversely affected and to what extent. But let me take the case of tea garden workers. Price of tea leaves is down, along with the consumption in the bazaars. Stores close early and gone is the hustle and bustle. The mask, the threat of the virus floating and landing on your nose, and the fear factor have taken a toll.
As an economist by training, I weigh the pros and cons of every option, whether we are discussing policy, investment or predictions about the future. Even though the Victorian historian Thomas Carlyle mocked the economics discipline as a “dismal science”, we also look at the brighter side of any economic disaster, and like to hedge our bets. After I wrote the previous paragraphs predicting a turnaround, a number of not-so-sanguine news items also came to my attention. Even though, by and large, the next year appears to be a promising one, there are some dark spots lurking in the background too. Some fellow economists have mentioned the prospect of a “K-Shaped Recovery” which implies that some sectors, particularly some segments of the population will suffer even after the economy gets back on its feet. The chief economist of the IMF predicts that highly paid, well-skilled workers will do much better than people who are lower paid and lower-skilled. Social services advocates and policy experts fear that whether we are talking about developed or developing countries, the free-market and competitive environment will favour the wealthier companies with the strongest lobbying teams, as I discuss in an earlier essay in this newspaper. (“Covid-19 and the Economic Challenges for South Asian Countries,” October 18, 2020, The Daily Star )
Another potential roadblock is the lack of availability of vaccines for all and its acceptability. It has been known that there will not be enough vaccine shots for months. Health policy experts and concerned administration teams need to address the issue of equal access to vaccines for the poor. To compound matters, we are faced with the prospects of a deadlier variant of the virus that has emerged in the UK, Nigeria and South Africa.
Having said all that, Christmas is finally here, and the New Year is just around the corner. I can’t resist the temptation of ending this message with a word from Haruki Murakami, the Japanese author and philosopher. “And once the storm is over you won’t remember how you made it through, how you managed to survive. You won’t even be sure, in fact, whether the storm is really over. But one thing is certain. When you come out of the storm you won’t be the same person who walked in. That’s what this storm’s all about.”
My wishes are that we all come out of the storm that came in 2020 as better human beings.
Dr Abdullah Shibli is an economist and currently works in information technology. He is also Senior Research Fellow, International Sustainable Development Institute (ISDI), a think-tank in Boston, USA.
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STAR