With over 3 million cases globally, COVID-19 has taken the world for a ride- except this one took us to that nerve wracking point of just slightly after the top when we begin to drop, and stopped. While the world is under immense panic and chaos, economies around the world are tanking. We’re now at the beginning of a global recession. More than a third of the world’s population is under some form of restriction, with some countries like India, Ireland, Norway and Italy, that are in a complete lockdown. The standards of living, putting aside the obvious ill-health aspect brought by the pandemic, have collectively dropped. Though we can see a shift into the virtual world in terms of education, it is only a minuscule percentage of the population that can reap the benefits of such fluidity. Countries with high poverty stricken sectors now don’t have a basic ration of food to maintain their survival during this time, let alone online education.
While we acknowledge the deteriorating quality of lives during the pandemic, let’s take a look at what could possibly happen after. We can expect increased protectionist measures in terms of trade for several industries. This could appear in the form of increased tariffs and quotas especially towards imports from China. Though this risks a trade war and potentially higher prices from alternate sellers, it is unlikely that nations would risk another outbreak or set back to their own health and their economies, just for the sake of reducing their costs of production by a small amount.
Free trade is an accelerator of efficiency. When domestic producers are met with hard competition from around the world, they must fight to keep their businesses up and running. It is one of the main reasons why protectionism is generally never taken to an extreme. However, this time around, it seems like even with an extreme wave of protectionism around the world, efficiency may not be compromised in domestic economies. Producers in their own respective countries will face a quick rising demand for their goods and services and be endowed with a great pressure to produce supply to meet it. Firms will continue to run on the new incentive they’ve acquired to help themselves and their consumers sustain with domestic products.
Let’s not forget one of the main impacts of this virus on our economies. Unemployment. With millions and millions of workers across all stratas of society, both blue and white collar, being stripped of their annual income and/or daily wages, the labor market will see a an influx of workers willing to work. This will play well with the increased demand for domestic production too.
In regards to goods and services that weren’t originally available in a country all together, we may see more start-ups and and innovation in domestic production given that consumer demand would be higher than ever. With trade restrictions on imports, an opportunity for businesses to monopolise and reap the profits of an untapped industry and/or revenue stream in their country would be created.
However, while international trade may see tightly guarded economies for final goods and services, it may not be the case for raw materials, as they aren’t man-made but rather natural occurring. In that sense, countries surrounding China having an abundance of the same raw materials, especially India, will see a change in their current accounts in the balance of payments. Even after a cure for the virus has been found, it is less likely that countries will continue to import edible items and agricultural produce from China, which will in turn benefit south east asian countries like Vietnam and south asian countries like India, as they would be relied on for rice and spices. China is also a large exporter of the base ingredients used in making several medicinal products, hydroxychloroquine being one of them. The increased focus on health care will enable neighbouring countries to take over a proportion of China’s global market share and thereby increase their exports in that sector as well. New international relationships and trade deals are bound to form and change the way countries will trade and their respective policies. It solidifies the idea that protectionism and free trade, though polar opposites, work hand in hand to provide optimal results that benefit the majority, so long as they are strategically managed.
As we look at the after scenario in a positive light, we must take into account that situations aren’t as certain as we may want or perceive them to be. A view of the good that the end of this virus may bring will only be sought after a slow and painful journey of finding our way out of the dark tunnel we will be left in first. Given that economies were already declining in the pre-pandemic time period, before long term decisions can be made, governments will look to focus on immediate fixes and the short term changes that they can make first- A process with no clear time frame whatsoever. But, to climb our way to the sky, we first need to dig ourselves out of the currently deepening hole we’d be left in. Many may find it difficult to visualise exactly how long that would take and with what an exorbitant amount of effort and cooperation, given that as citizens of this world we still haven’t found our way around wars, income disparity and consensus on pressing issues like equality for all or climate change. But we’ve overcome pandemics and disastrous recessions in the past, and with more resources and technological advancements than ever before, there is no doubt that we’ll overcome this too, as long as we maintain and work for the same shared goal on our way out.
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