Countries better prepared to respond to the COVID-19 pandemic from a healthcare perspective were less likely to need a strong economic response, which is a link that needed to be acknowledged, an Italian expert said.
Antonio Villafranca, research coordinator and co-head of the Italian Institute for International Political Studies’ Europe and Global Governance Centre, said when the coronavirus outbreak hit Europe he and his colleagues were asked by European governments to look at economic remedies.
European Union countries last week agreed to set up a 750 billion-euro ($857 billion) fund to help the economies of member states ravaged by the pandemic recover.
“This is really unprecedented,”Villafranca told the Global Think Tank Webinar on Wednesday.
“If anybody told me that four or five months ago, I would have said he or she was crazy because that was absolutely impossible in the European Union. Still, we did it,” said Villafranca, who specializes in economics and international relations.
“But we have to acknowledge that there would be no need for such a dire economic response if we had managed to improve our healthcare response sufficiently,” he added.
For instance, in the United States the pandemic was severe by the end of March. But the coronavirus containment measures, such as partial lockdowns, were not enough, and as a result the economy was ravaged and unemployment surged.
Villafranca said the US unemployment rate skyrocketed from 3 percent before the pandemic to close to 15 percent in April.
As the US started to reopen in a bid to revive the economy, a second wave of the coronavirus hit. Many US states were forced to go back into partial lockdowns, harming the economy again. “This becomes a circle,” Villafranca said.
However, if a country deals with the virus well from a healthcare perspective, then it is less likely to need a strong economic response, he said.
Germany responded quickly to the pandemic through measures such as mass testing, shutting down schools and banning large public gatherings. Its economy is expected to shrink by about 6 percent this year.
But the economy of Spain, which was caught unprepared and hit severely by the pandemic, is expected to shrink by about 11 percent this year, Villafranca said, citing figures from the Summer 2020 Economic Forecast.
He added that extra money was needed to boost healthcare responses, but that amount was small when compared to the economic losses resulting from a country closing down.
“We have to consider at the national, European and international level the link between the fight against the virus and the health-related measures which we are taking and the economic impact,” he said.
He added that measures taken by blocs and organizations like the G20 and the International Monetary Fund to help poorer countries survive the pandemic were just “a drop in the ocean of what is needed”.
ANTONIO VILLAFRANCA, research coordinator and co-head of the Europe and Global Governance Centre at the Italian Institute for International Political Studies. Villafranca is a nonresident senior fellow at Renmin University of China’s Chongyang Institute for Financial Studies.