Question

1. In terms of long-run growth, do you think there will be a negative impact due to Covid-19?

2. Do you see any potential for a positive impact on economic growth as a result of the pandemic?

3. Will the impact be different for countries that are currently high income compared with low income countries?

Answer 1

Answer 1. Covid-19 is an unforeseen incidence that has affected the entire world at large scale. Though the impacts of Covid-19 on the world and national economies cannot be calculated with certainty, but given the magnitude of the pandemic and its coverage, the outbreak seems to bring great long-term effect for economies. Economists argue that the pandemic outbreak has been the great result of large global integration and thus, economies post Covid-19 are believed to become more self-reliant. The world is thought to disintegrate at international level. Secondly, the pandemic has resulted in huge loss among the countries through loss of human and physical capital, which in return, will have huge economic cost in the long-run. Countries have been the through the different phases of lock-down, and thus, the world economy is expected to shrink in growth indicators, further pushing poverty and unemployment rates to high numbers.

Answer 2. There may be positive impact on economic growth for short-run, but if health is given priority and it improves productivity, it can bring long-term economic growth. Covid-19 has highlighted the importance of health and human capital, especially for developing countries. Developing counties has finally realized the importance of strong health system and public institutions for the country. And thus, the long awaited social sectors seems to get some priority and health of people, workers and working conditions are expected to improve.

Answer 3. High-income counties that have high per-capita and strong health systems are expected to recover better from the pandemic as compared to developing nations. High-income countries with high resources are expected to survive longer in the phases of lock-down, provide better livelihood, health facilities, technological opportunities as compared to low-income counties with less resources and less know-how.