Pandemic affecting economy

PAPUA New Guinea may have a record of just eight coronavirus cases but the effects of this global pandemic is taking its toll on the economy.
Many have being laid off from their jobs – those formally engaged in a paid job.
Central banks everywhere are trying to push money into the system and cut interest rate.
It is no secret that the combination of trade and monetary problems emanating from Europe and the USA will put severe strain on governments in developing countries which are already battling with soaring medical costs, pressing demands to provide emergency assistance to the poorest sections of the population and assistance to bail out faltering firms.
World trading has been affected by changes in production patterns. One example of global demand is on personal protective equipment (PPE) especially face masks, hand sanitisers, UTM (universal transport media) kits and even reagents needed to conduct Covid-19 test.
There is no denying that the effect of Covid-19 remains uncertain.
It is too early to say when this pandemic will phase out.
PNG went into lockdown on March 22 and then a state of emergency was declared two weeks later we are now into the sixth week.
The Treasurer yesterday said a negative growth was predicted.
According to a commissioned research, the gross domestic product forecast at 2 per cent in the 2020 National Budget would drop to minus 1.5 per cent (-1.5pc).
This is the impact of the two-month shutdown.
A further drop to minus 6.2 per cent is expected if it’s going to be a three-month lockdown.
Prime Minister James Marape did not mince his words admitting the impact of the lockdown was starting to catch up, with the Government, business community and ordinary citizens feeling the effect.
One thing for sure, economic trading should resume. Business should return to normal and we should learn to abide by the proper protocols to strike the balance between protecting our health and the livelihood of people.
Sectors such as travel, tourism and construction would be particularly hard hit.
Most businesses will definitely be reviewing their strategies and assessing their operational risk.
Banks and other lenders may maintain or expand lending as a result of Government guarantees or pressure, or a combination of the two. This will also put tremendous pressures on banks and firms in these countries.
The truth is that, there is a serious risk of defaults.
We can expect more economic pain as virus containment measures continue to decrease economic activity.
While we can’t compare PNG to developed nations, the Government should now use lessons from Covid-19 and realign its focus to improving the health systems in the country, border securities, education and agriculture and road infrastructure.
Lessons learned from how China, South Korea and Singapore brought down rate of infections should be considered.
What they did aggressively is now being done world wide – early containment and social distancing.
Many countries have come with strategies in dealing with the effect of the pandemic and for PNG, we should now adjust to living with Covid-19 for the rest of the year and next year or so too.
We concur with the Pricewaterhouse Coopers (PWC) in one of its Covid-19 update: The challenges of responding to the pandemic will change the economy and society for years to come, perhaps forever.